NEW YORK, United States — Goldman Sachs Group Inc. will lend $500 million to Alibaba Group Holding Ltd. as the company seeks to arrange $8 billion of loans, two people familiar with the matter said.

The New York-based investment bank pledged funds to the facility for China’s biggest e-commerce company, proceeds of which will partly be used to refinance debt at a lower cost, the people said yesterday, asking not to be identified because the details are private. Alibaba has set a June 7 response deadline for banks.

Alibaba is rolling out a smartphone operating system and buying a stake in China's biggest Twitter-like service -- steps considered a prelude to an initial public offering that may value the company at as much as $100 billion. Chief Executive Officer Jonathan Lu, who took over from billionaire founder Jack Ma last month, is refocusing on mobile platforms to replicate its dominance with desktop computer users.

John Spelich, a Hong Kong-based spokesman for Alibaba, said he had “no comment on speculation regarding who may have joined the syndication” when asked about the company’s financing plans.

The financing offers so-called blended all-in rates of 314 basis points, 307 basis points and 300 basis points more than the London interbank offered rate for pledges of $500 million, $300 million and $200 million respectively, the people familiar with the matter said.

Banks Hired

The debt is split into a $4 billion five-year term loan, a $2.5 billion three-year term facility and a $1.5 billion similar-maturity revolving credit line, the people said.

Australia & New Zealand Banking Group Ltd., Citigroup Inc., Credit Suisse Group AG, DBS Bank Ltd., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., Mizuho Corporate Bank Ltd. and Morgan Stanley were hired to help arrange the loan and have been marketing it to a wider group of banks in syndication.

Banks are keen to form relationships with Alibaba to increase their chances of being selected to help the company with its share sale.

Hangzhou-based Alibaba was formed in 1999 as an online marketplace for Chinese companies. It doesn’t sell merchandise itself but instead runs platforms including Taobao Marketplace and Tmall.com that connect retail brands with consumers, a cross between Amazon.com Inc. and eBay Inc. It makes most of its sales from commissions and advertising.

Goods sold on Alibaba -- ranging from consumer staples to cement and aluminum -- were worth $180 billion last year, according to Eric Qiu, an analyst at Guosen Securities Co. in Hong Kong.

Alibaba will use $4.8 billion of the loan proceeds to refinance debt, $800 million to buy back preferred shares from Yahoo! Inc., and the rest for corporate purposes, another person familiar with the matter said May 2.

By: Katrina Nicholas, Foster Wong; Editors: Sarah McDonald, Pavel Alpeyev