Alibaba Group Holding Ltd (NYSE:BABA) is undergoing negotiations with banks for around $4 billion loan for expansion. According to company sources, the loan would fund the global acquisitions of the company and enable it to tackle competition in markets other than China.
The loan talks were initiated with a $3 billion but the amount was raised to $4 billion by Alibaba keeping in mind the billions spent by the company in expanding in China and other markets including India. The loan is likely to be granted to the company in April 2016.
Alibaba is on an expansion spree to become the top e-commerce company worldwide and it has added many new products like mobile apps and online payment option to attract more customers.
Alibaba In $11 Billion Debt
At present, Alibaba is under debt of around $11 billion and the lenders include Citigroup Inc (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), among others. As per data compiled by Bloomberg, Alibaba has to pay a term loan $2.5 billion and $1.5 billion credit due April 30, 2016.
Strengthening In U.S. Market
Meanwhile, Alibaba is mulling to increase its U.S. share as it already has captured the Chinese e-commerce market with an 80% share. The company is also looking for expansion in Russia and India where e-commerce is gaining ground. As the company has already faced failure in the U.S. market once, analysts opine that it needs to do thorough research before expanding in the foreign market.
To strengthen its hold in U.S. the company acquired a stake in Groupon for a future expansion in the market and to gain some information of the area. More such ventures are mulled by the company and once the $4 billion loan is passed, there is going to be no looking back for Alibaba.
In 2015, Alibaba invested $10 billion in categories including online food-ordering and online video. The 3Q15 results of the company were also better than the estimates of the Wall Street as the company showed profits and increased revenue. The online sales of the e-commerce company witnessed a boost due to the Single’s Day Event promotions.