HONG KONG — Shares of Alibaba Group Holding Ltd. fell sharply on Monday after the Chinese technology company finalized a large share placement aimed at funding its artificial-intelligence ambitions, with investors focusing on dilution and the near-term costs of heavy capital spending.

Alibaba's Hong Kong-listed stock closed at 112.50 Hong Kong dollars, down 10.50 dollars or 8.54 percent, according to market data from Aug. 24. The shares had fallen as much as about 10.5 percent earlier in the session before stabilizing near the placement price. The decline followed the announcement of a roughly 80 billion Hong Kong dollar ($10.2 billion) offering of 710 million new shares priced at 112.70 Hong Kong dollars each, representing an 8.4 percent discount to the previous closing level.

The deal ranks as the largest primary follow-on equity offering by a Hong Kong-listed company and among the biggest globally this year. Alibaba said the net proceeds will be used entirely to build out its full-stack AI capabilities and related infrastructure, including chips, computing capacity and models. The placement attracted robust demand, with the order book reportedly reaching about $28 billion, including significant interest from long-only and sovereign investors.

The fundraising comes one week after Alibaba reported results for the quarter ended June 30 that highlighted both the momentum and the expense of its AI push. Group revenue rose 9 percent year over year to 268.95 billion yuan. Revenue from AI Cloud and Compute Services accelerated to 45 percent growth, while AI-related product revenue delivered its........

© International Business Times