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Alibaba Pledges $15.5 Billion to ‘Common Prosperity’ Drive

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Alibaba Pledges $15.5 Billion to ‘Common Prosperity’ Drive
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(Bloomberg) -- Alibaba Group Holding Ltd. pledged 100 billion yuan ($15.5 billion) over five years toward Xi Jinping’s “common prosperity” vision, becoming the latest tech giant to bankroll China’s broad aim to share the wealth.

China’s second-largest company will spread the money between 10 initiatives encompassing technology investment and support for small companies, the government-backed Zhejiang Daily reported Thursday. An Alibaba spokesperson confirmed the report, without elaborating. The company’s shares were little changed in New York trading.

Alibaba joins a growing number of its largest peers in promising to give back after accumulating vast wealth during a decade-long mobile internet boom. Pinduoduo Inc., the fast-rising online commerce giant now challenging Alibaba in the countryside, pledged its next $1.5 billion in profit to farmers’ welfare. Tencent Holdings Ltd., China’s most valuable company, said last month it will double the amount of money it’s allocating for social responsibility programs to about $15 billion.

They’re joined by a growing number of tech billionaires, from PDD’s Colin Huang to ByteDance Ltd.’s Zhang Yiming and Xiaomi Corp.’s Lei Jun, in donating vast sums to a plethora of causes. The largesse coincides with a period of intensified scrutiny over the growing power and influence of China’s largest corporations from Tencent to Alibaba, which received a $2.8 billion fine for allegedly abusing its market dominance.

Read more: Chinese Firms Rush to Embrace Xi’s ‘Common Prosperity’ Slogan

What Bloomberg Intelligence Says

Alibaba’s plan to commit 100 billion yuan ($15.5 billion) to help finance mainland China’s push for “common prosperity” points to greater social accountability, is easily affordable and could help resolve regulatory concerns; it may look dramatic, but our underlying view on sales and earnings is unaffected. The amount, to be deployed through 2025, is just 31% of Alibaba’s current cash balance and compares with its trailing 12-month free cash flow of $24 billion. The agreement also puts Alibaba more on parity with Tencent, which had stepped up earlier.

- Catherine Lim and Tiffany Tam, analysts

Click here for the research.

(Updates with analysts’ comment and shares from the second paragraph)

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