According to reports in The Wall Street Journal, Alibaba Group Chairman Jack Ma and Vice Chairman Joe Tsai are currently planning to collectively borrow around $2 billion, using their shares in the company as collateral. So far, Credit Suisse Group AG, Goldman Sachs Group Inc. and Morgan Stanley are the banks behind the transaction so far.
Why exactly? What is the money being used for?
So far, the answer to that is more or less best expressed in a shrug, since Alibaba’s only comment on the subject is that it is “prudent financial planning.”
“Share financing is very common for founders and senior executives who hold such a strong belief in the future growth potential of their companies,” the firm noted in a statement.
Ma is worth a reported $27 billion, and Tsai’s net worth clocks in around $7 billion, according to a Shanghai research firm, but those big values may have taken a hit with the recent carnage in the Chinese marketplace.
When the markets closed in China on Thursday (Sept. 3), Alibaba shares were down 2.3 percent from its initial public offering price in September of $68 and 45 percent off its high of $120 in November.
Tsai has said that he and Ma plan to hold their respective ~7 percent and ~3 percent of Alibaba’s common stock, as Tsai noted both men have “zero intention” of selling their shares when a share lockup expires later this month, aside from “a small amount” of shares in their charitable trusts.