Alibaba Group Holding Ltd.’s cloud division is weighing a private round to raise funds from Chinese state-owned enterprises ahead of the business’s market debut in Hong Kong, people with knowledge of the matter said.
The tech giant is working with advisers on a potential Cloud Intelligence Unit fundraising that could raise about 10 billion yuan to 20 billion yuan ($1.4 billion to $2.8 billion), according to the people. Prospective investors include state-backed telecommunication companies, they said.
Alibaba planned to spin off the unit by distributing a stock dividend to shareholders within 12 months, the company announced in May. Raising funds from state-owned firms could increase the chances of winning new government cloud contracts, boosting the use of Alibaba’s related services, Bloomberg Intelligence analysts Catherine Lim and Marvin Lo wrote in a note on Tuesday. With the potential deal, a listing may value the cloud unit at more than $55 billion, they added.
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