Chinese internet behemoth Alibaba has just closed a gigantic loan, somewhere north of $3 Billion. Now before you put on your thinking cap to wonder at the prospect of Alibaba, which has its tendrils in hundreds of startups around the world, taking a loan of this magnitude — Yes, it seems like the company is looking to bolster its already significant string of acquisitions and investments.
The news is not surprising. After all, several prominent media outlets including the wall street journal, had already predicted the same. However, the actual figures fall short of the predicted by somewhere around $1 Billion.
As per the SEC filling of the loan,
Alibaba Group Holding Limited today signed a five-year US$3 billion syndicated loan agreement with a group of eight lead arrangers. The loan, which is subject to upsize through over subscriptions in syndication, has a five-year bullet maturity and is priced at 110 basis points over LIBOR. The use of proceeds of the loan is for general corporate purposes.
While General Corporate Purposes isn’t particularly suggestive in of itself, Alibaba’s history certainly is. The company is well known for investing hundreds upon hundreds of millions of dollars into startups and has shown no signs of stopping on that count. What’s more, most of the companies Alibaba has invested in, seem to be growing apace.
So which direction is this newly gained stream of cash likely to flow in? While there is nothing remotely like an official word, on the topic, the tom toms have already begun beating in the streets as to where, if anywhere, will Alibaba will pump its newly gained cash.
Segment wise, media and e-commerce seem to be the top choices for Alibaba. The company is already involved in a huge, $3.5 Billion deal for Youku Todou, one of China’s largest video consumption services, a company in which it already owns over 18 percent stakes. The company’s other media endeavours include microblogging website weibo, Alibaba pictures and the Netflix like service, Tmall box office.
Geographically, India has of late, been occupying one of the top slots on its list of places to invest in, particularly the e-commerce segment.
Alibaba has significant interests in a bunch of Indian startups, such as Paytm, Snapdeal etc and the last we heard, was planning to invest in Flipkart. Not only has Chairman Jack Ma, time and again affirmed his company’s commitment to increase its presence in India, his company has also begun integrating its Indian acquisitions with its Chinese counterparts.
Well, we will definitely keep you updated on the topic. Meanwhile, the news is bound to provide a measure of relief to — or at least some anticipatory thrill — to the Indian startup ecosystem, which has been pining under the investors tightening purse strings.
Meanwhile, its M&A time for Alibaba.