Telegram's $1.745 billion bond sale severely oversubscribed

Telegram has significantly reduced the allocation to Israeli institutional investors in its recent bond issuance. Calcalist has learned that despite over $100 million in demand from the local market, only $35 million was ultimately allocated.

As a result of the cutback, each Israeli investor will receive only about a third of their original order volume, even though the initial plan had been to allocate more than $100 million to Israeli institutions.

In total, the instant messaging giant raised $1.745 billion across two bond series. Of this amount, $745 million will mature in 2026, while the remaining $1 billion was issued as a new convertible bond series, which can be converted into Telegram shares at a discount during the company’s next equity offering.

The limited allocation to Israeli investors is likely a result of surging demand in the U.S. and Europe. Interest was further fueled by this week’s announcement that Elon Musk's AI startup xAI will pay Telegram $300 million to deploy its Grok chatbot on the messaging app, aiming to tap the platform's more than one billion users and sharpen its competitive edge in the booming artificial intelligence market.

Under the one-year deal, xAI will also give Telegram half of any subscription sales made through the messaging app, Telegram founder Pavel Durov said in a post on X on Wednesday, adding that the $300 million will be paid in cash and stock.

Durov said xAI will only access data that Telegram users explicitly share with Grok through direct interactions.

Musk said no deal has been signed in a reply to the post on X, to which Durov said the parties have agreed in principle but formalities were pending.

The deal could provide xAI, which acquired X earlier this year, with valuable data to train and develop its AI models.

According to information presented to Israeli investors by Phoenix Underwriting, a unit of the Phoenix Group that is assisting with the local bond raising, Telegram ended 2024 with around 1 billion users, more than $1 billion in annual revenue, and $500 million in cash, excluding its crypto assets. The company reportedly turned a profit during the year, though exact figures were not disclosed.

This is not Telegram’s first foray into debt markets. In 2021, it raised $2.35 billion through two rounds of bond sales. Its remaining debt, $1.72 billion, is due in full this coming March, prompting the current fundraising effort to refinance existing obligations.

Reuters contributed to this report