Alibaba has announced to set fees on the loan deal agreed from a group of eight banks.
Last week, Alibaba Group Holding announced that it has asked for a loan up to $4 billion from eight Chinese banks, which would be used in funding its expansion plans. The expansion plans usually would be done through several deals and acquisitions from the loan. A couple of days ago, Reuters reported that the eight banks have raised money up to $3 billion, which is just a million shy of its requested $4 billion loan. The Chinese tech giant closed the deal and agreed the $3 billion loan for the next five to seven years.
Alibaba Group was already strong-armed while it was investing in startups in domestic and international markets. Currently, the company is making its presence in the Indian e-commerce market by holding significant stakes in Snapdeal and PayTM. It is also in talks with Flipkart, the biggest e-commerce platform, for investment purposes. Thus, it is further beefed up on the investments part with the new funding it received from the banks.
Alibaba has set the fees that it will be offering to the banks on $4 billion loan. It has decided to offer 60 basis points to its lenders who commit to the $200 million or above to the facility. The banks will begin marketing this facility from the agreed loan of $3 billion. The people with the knowledge requested to not be identified because the dealings of this matter were confidential. The people added that 50 basis points will be offered to lenders committing between $150 million to $190 million and 40 basis points to lenders committing between $100 million to $140 million.
The Chinese e-commerce giant has planned a roadshow in Hong Kong. It has agreed to pay an early bird fee i.e. offering five basis points to those banks who participate before April. The final deadline date for participating in the syndication is April 8. The spokesman of Alibaba, Bob Christie, refused to comment on this matter as of yet.
In a US regulatory filing held on March 9, Alibaba announced that it has signed a deal with eight banks agreeing a five-year $3 billion loan to fund its plans. The size of the loan can be boosted if there is a demand from other lenders. The filing reported that this loan to Alibaba has offered a fee of 110 basis points more than what London interbank offered initially.
The group of eight banks includes Australia & New Zealand Banking Group Ltd., Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Mizuho Financial Group Inc. and Morgan Stanley as reported by the people familiar to the matter.
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