Alibaba Group Holding Ltd.’s cloud division is weighing a private round to raise funds from Chinese state-owned enterprises ahead of the business’s market debut in Hong Kong, people with knowledge of the matter said.

The tech giant is working with advisers on a potential Cloud Intelligence Unit fundraising that could raise about 10 billion yuan to 20 billion yuan ($1.4 billion to $2.8 billion), according to the people. Prospective investors include state-backed telecommunication companies, they said.

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Alibaba Cloud Eyes State Firms for Up to $3 Billion Fundraising