SoftBank, Alibaba’s largest shareholder, previously owned about 32 percent of the shares, and the transactions will bring its stake down to about 28 percent. The company said the deals will help to boost liquidity and improve its leverage ratio.
The largest chunk will come with the issuance of $5 billion in mandatory exchangeable trust securities convertible into Alibaba shares in three years. SoftBank also plans to sell $2 billion in shares to Alibaba, $400 million to the Alibaba Partnership and $500 million to an unnamed sovereign wealth fund.
“As SoftBank looks to strengthen its own balance sheet, Alibaba determined that it was the best use of our capital to reinvest in our own business through an efficient buyback of a large number of shares in our own company that is accretive to our stockholders,” Alibaba Executive Chairman Jack Ma said in a statement.
In a statement, Softbank said it “continues to be committed to its partnership with Alibaba.” It added the deals are driven by its “capital structure and deleveraging objectives.”
SoftBank, which owns a majority of U.S. telecom carrier Sprint, first invested in Alibaba in 2000.
Alibaba’s U.S.-listed shares fell about 2 percent in after-hours trading.