Bilibili Gets Buy Rating From Daiwa After $700 Million Convertible Bond Deal

Daiwa has initiated coverage on Bilibili with a Buy rating after the company announced on September 4 a $700 million zero-coupon convertible bond issue and Tencent's sale of its entire roughly 9.6% stake, according to ETNet. The broker said the transaction structure is innovative and creates a three-way win, removing a long-standing overhang from the possibility of Tencent selling its holdings. It said the deal brings Bilibili about $400 million in new funds and, through an immediate share buyback and cancellation, significantly reduces potential dilution. Daiwa added that future conversion could still dilute shareholders, but only if the stock rises materially, while Tencent can monetise the bonds in the over-the-counter market without directly selling shares, limiting pressure on the stock.