PE-backed Alibaba, Haier to launch logistics JV
PE-backed Alibaba Group will invest a total of HK$2.8 billion ($360 million) in Haier Electronics Group, a Hong Kong-listed subsidiary of Chinese home appliance maker Haier Group, to expand its logistics and distribution network. Haier Electronics is backed by The Carlyle Group.
Of the total amount, HK$1.86 billion will be invested to establish a joint venture, known as Goodaymart, according to a statement. Alibaba will pick a 9.9% stakes of Goodaymart for HK$541 million.
It will also subscribe to convertible bonds issued by Haier Electronics worth HK$1.32 billion. These bonds can be converted into shares in Haier Electronics or into a 24.1% stake in Goodaymart.
Furthermore, Alibaba will subscribe to HK$965 million of new shares issued by Haier Electronics, equating to an approximately 2% stake in the company.
"This collaboration with Haier Group is a win-win-win partnership," said Jack Ma, executive chairman of Alibaba. "Through this partnership, we will create value for our customers and as a result create value for Alibaba Group and Haier Group. The new economy is not the digital economy, but rather one that combines the real economy and digital economy, a true blending of 'virtual' and 'real'."
Goodaymart, a business operated by Haier Electronics, is expected to support the development of Tmall.com, a B2C site under Alibaba Group. It will provide merchants and consumers with a fast and convenient logistics and delivery services for household appliances and large-sized goods.
Currently, Goodaymart has nine shipping bases nationwide, 90 logistics delivery centers and more than 2 million square meters in warehouse space.
Early in May, Alibaba formed a China Smart Logistic Network, also known as Cainiao Network Technology, teaming up with five existing logistics providers to help the company achieve greater penetration in lower-tier cities and save on costs. Chinese conglomerate Fosun International contributed RMB500 million ($81.4 million) for a 10% interest in the project.
Carlyle invested up to $194 million in Haier Electronics in 2011, taking an approximately 9% stake in the company. Two months ago KKR acquired a 10% stake in Qingdao Haier, the Shanghai-listed parent company of Haier Electronics, for RMB3.38 billion.
Alibaba is backed by a string of private equity firms following an employee liquidity event in 2011 and a partial buyback from Yahoo in 2012.
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