The biggest shareholder of Alibaba, Softbank said it would book a gain of US$34.1 billion by offloading a 9 percent stake in the Chinese e-commerce giant by settling prepaid forward contracts.
The Hang Seng Index was dragged by Alibaba’s share’s price together and China’s inflation data yesterday. Alibaba dropped 1.8% ahead of the news.
The Japanese investment giant’s board approved the early physical settlement of prepaid forward contracts corresponding to about 242 million American depositary receipts. After the settlement, which will run from August to September, its stake in Alibaba will fall to 14.6 percent from 23.7 percent as of the end of June.
SoftBank expects to gain more than US$34 billion from the sale.
SoftBank had previously raised a huge slug of capital by selling forward contracts on Alibaba, taking in US$10.5 billion during the June quarter and another US$6.8 billion through such contracts on and after July 1.
The transaction is not expected to result in additional sales of Alibaba shares on the market as the shares were hedged at the time of the original monetisation, SoftBank said.