BILIBILI-W (09626) surged nearly 3% at market open, with shares climbing 2.74% to HK$127.4 by the time of writing, on trading volume of HK$6.05 million. The positive market reaction follows the company's announcement of a proposed offering of $700 million in convertible senior notes due 2031, with TENCENT (00700) agreeing to subscribe for $200 million of the notes through its subsidiary on the same terms as other investors.
The company stated that beyond allocating a portion of the proceeds for concurrent share repurchases, the remaining funds will be directed toward AI-driven business expansion. Daiwa Securities issued a research note characterizing the transaction as a "triple win" structure, noting that TENCENT has completed the disposal of its entire approximate 9.6% stake in the company as part of the arrangement.
The brokerage firm holds a positive view on this innovative structure, emphasizing that the deal eliminates the long-standing overhang from TENCENT's potential share sell-down, while also injecting approximately $400 million in fresh capital into BILIBILI-W. The structure also limits equity dilution through the immediate execution of a $300 million share buyback and cancellation program.
Daiwa believes the benefits outweigh the costs, as the transaction resolves the overhang from TENCENT's shareholding pressure while enabling the company to secure zero-coupon, long-tenor funding at a cost significantly below typical offshore bond issuance.
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