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E-commerce giant Alibaba Group opened 3.5% up to touch HK$91 before paring gains to 2.2% as of 10:02 am local time.
SoftBank Group Corp on Wednesday said it will book an estimated gain of 4.6 trillion yen ($34.08 billion) on settling prepaid forward contracts using shares in Alibaba Group Holding, reducing its stake to 14.6% from 23.7%.
The estimated gain includes 2.4 trillion yen from the revaluation of shares in the Chinese e-commerce giant and a derivative gain of 0.7 trillion yen, SoftBank said in a filing.
The settled prepaid forward contracts correspond to a maximum of about 242 million American depositary shares of Alibaba, or roughly 9% of the Chinese company’s total outstanding shares.
The SoftBank 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, adding it would “continue to maintain a good relationship with Alibaba.”
Analysts say that the move may be somewhat supportive for Alibaba shares because of substantially reduced fears of future overhang, but some investors may take meaning from that the largest shareholder sold nearly half their state.
