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Catching Up With Alibaba, Its Missing Founder & Fundraising Plans

A fundraising in the cards, a missing founder and the increasing scrutiny of the Chinese government and in the middle is Alibaba.

What Happened?

Sources told Reuters that Alibaba Group Holding Ltd is planning to raise at least $5 billion, but it could end up raising as much as $8 billion through a dollar bond sale as early as next week. Bloomberg wrote that the deal will be a multi-tranche offering, with specific tenors yet to be determined.

The Timing

This fundraising is coming at a time when both the founder, Jack Ma and the company, Alibaba have been going through difficult times. Unless you’ve been going through a digital detox for the past 3 days, you would have definitely seen the news of how Jack Ma hasn’t been seen publicly in over two months. He also failed to appear as scheduled in the final episode of his own talent show, Africa’s Business Heroes.

Several reports said that Ma’s disappearance is linked to the Chinese government’s tightening grip on Ma and his firms. But why are people thinking that the Chinese government is behind this?

Ma x China x Tech Giants

Jack Ma and China have been having a complicated relationship for a while. However, things weren’t always this complicated. Ma is a Communist Party member, and he was once seen as a role model by the Party for his contribution to the “digital economy”. So, what changed?

China’s stance towards Ma changed after he made certain comments about China’s financial and regulatory system. After his comments, China stopped Ant’s $37 billion initial public offering. When the country halted Ant Group’s IPO, it became clear that China doesn’t want the firm to become bigger, and it looked as if the government was not willing to let go of its control on the financial sector just yet.

Later, the government came up with more rules for online shopping via livestreams, which is one of the fastest growing areas of Chinese e-commerce. Many thought that Alibaba was the biggest target of the government, and they weren’t wrong. Alibaba now accounts for three-quarters of China’s online sales and nearly a fifth of China’s total retail sales.

However, China didn’t stop with Alibaba. It went further. In November last year, Financial Times reported that China’s market regulator has drawn up draft antitrust rules. This came as a shock to everyone because the draft made it clear that apart from Alibaba, Tencent, Meituan and JD.com would also fall under the new regulations. This move by China made it clear that the country is going after all the tech companies.

But why target tech giants? Amid multiple speculations, Bloomberg wrote that there is a possibility that the might of the tech companies was seen as competitive to government control. So, these rules are designed to control the industry before it grows even bigger. In short, nothing can be bigger than the Chinese government itself, no matter who they are and how big of a company they are.

Zooming Out

There was a recent report by CNBC’s David Faber, who quoted sources and said that Jack Ma is not missing but has been lying low for the time being. For now, we do not know for sure where he actually is.

However, we know one thing for sure. This fundraising could test the appetite of global investors, and it will show how the investor sentiments are doing amid Beijing’s tight grip over tech companies and its impact on Alibaba. We have to wait and see how investors will choose to play their cards during these uncertain times? — Will they stay away from the company or will they go all-in despite the challenges faced by Alibaba? And that’s a question that can only be answered by the future

Head to moneyguru’s Insight section to stay updated on all major financial news updates of the day!

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