Alibaba invests $3.3b in logistics affiliate Cainiao

It brings the parent's interest in the company from 51% to 63%. This follows an approximately $800 million investment in 2017 that increased Alibaba's holding from 47% to 51%. One other existing investor made an equity commitment in the latest round but has not been identified.

Previous investors include Singapore's GIC Private and Temasek Holdings, Malaysia's Khazanah Nasional, and China's Primavera Capital, all of which joined an RMB10 billion ($1.5 billion) investment in 2016 that secured a roughly 20% stake. Primavera was also an early investor in Alibaba's Ant Financial unit. 

Established in 2013 as a digital platform to connect a network of express delivery companies in China, Cainiao helps logistics operators share information and establish protocols to deploy internet-of-things (IoT) services at scale. The platform aims to connect 100 million smart devices with IoT technologies in three years. Its current suite of connected devices includes warehousing and delivery robots, as well as algorithm-driven management systems.

"Cainiao strives to enhance service and user experience for merchants and consumers through superior technology and digital solutions, both within China and around the world," Daniel Zhang, executive chairman and CEO of Alibaba, said in a release. "We are committed to supporting its ongoing development, to realizing greater synergies throughout the entire Alibaba economy and accelerating digitization of the logistics industry."

Alibaba said the fresh capital would be used to help Cainiao shorten delivery times to 24 hours in China and 72 hours overseas. Digitization of the entire value chain and a focus on customer experience are considered core components of the strategy. This effort will include improvements to the package-tracking and shipping-services app, as well as leveraging the resources of existing Cainiao network members STO Express, Yunda Express, YTO Express, ZTO Express, and Best Express.

China's express delivery segment was estimated to have seen some 50 billion parcels handled in 2018, largely in support of a $1 billion domestic online retail market.

One of Cainiao's biggest competitors in this space is SF Express, which was initially a member of the Cainiao network before the two couriers entered a dispute around access to customer data. SF Express listed in Shenzhen in 2017 after receiving investment from several PE firms and currently has a market capitalization of around $25 billion.

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• Topics
• Greater China
• Support services
• Consumer
• Industrials
• Technology
• Expansion
• China
• Alibaba Group
• Logistics
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