SoftBank plans to sell its $7.9bn stake in Chinese online retailer Alibaba.

This transaction will help the Japanese company to reduce its huge debt, reported The Economic Times.

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Following the sale, SoftBank’s stake in Alibaba will decrease from the current 32.2% to 28%.

Alibaba executive chairman Jack Ma was quoted by Cnbc.com as saying: "As SoftBank looks to strengthen its own balance sheet, Alibaba determined that it was the best use of our capital to reinvest in our own business through an efficient buyback of a large number of shares in our own company that is accretive to our stockholders."

"As SoftBank looks to strengthen its own balance sheet, Alibaba determined that it was the best use of our capital to reinvest in our own business."

The Chinese online giant is purchasing back the shares worth around $2bn sold by SoftBank, while about $500m worth of shares will be sold to a wealth fund.

Last month, Alibaba announced its plan to open its Australian headquarters later this year, in order to bring in more local small and medium-sized businesses seeking to leverage its online retail platform.

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This office will serve as an operational centre for Australia and New Zealand.

Alibaba Group operates online marketplace Tmall and payments platform Alipay.

Established by Jack Ma in 1999, Alibaba is listed on the US stock exchange. It has more than 400 million active users worldwide.