Alibaba plans IPO for PE-backed logistics unit
Cainiao Smart Logistics Group, the private equity-backed logistics unit of Alibaba Group, will be spun off via an IPO as part of the parent company’s broader restructuring effort.
Singapore's GIC Private and Temasek Holdings, Malaysia's Khazanah Nasional, and China's Primavera Capital Group participated in a CNY 10bn (USD 1.5bn) funding round for Cainiao in 2016 at a valuation of CNY 50bn. Alibaba made several subsequent investments in the company, including USD 800m in 2017 and USD 3.3bn in 2019. There was another unnamed participant in the 2017 round.
In March, Alibaba announced plans to reorganise its operations into six business groups: cloud services, including enterprise collaboration platform DingTalk; e-commerce, including Taobao and Tmall; local services, including food delivery platform Ele.me; global digital business, including Lazada, AliExpress, Daraz, and Alibaba.com; media and entertainment, including Youku and Alibaba Pictures; and Cainiao.
More detail was given in the company's earnings announcement for the 2023 financial year. Cainiao and Freshippo – operator of the Hemma technology-enabled grocery store chain – will pursue IPOs, while the cloud business will be spun off through a dividend distribution to shareholders. There are also plans to raise third-party capital for the cloud business and for global digital business.
The Cainiao IPO is expected in the next 12-18 months, Alibaba said in a filing, noting that it currently owns 67% of the company with the rest held by strategic and global institutional investors.
Cainiao was established in 2013, initially as a digital platform to connect a network of express delivery companies in China. It now provides supply chain, logistics and delivery services to consumers and merchants that are customers of Alibaba's e-commerce entities as well as to third parties. Services include cargo collection, line haul, and last-mile delivery.
In China, the company operates Cainiao Post, which offers parcel pick-up and doorstep delivery as well as various other value-added services.
Cainiao generated CNY 55.7bn in revenue for the 12 months ended March 2023, up 21% year-on-year. Adjusted EBITA remained negative but narrowed from CNY 1.5bn to CNY 391m. Alibaba's overall revenue was CNY 869.9bn, of which two-thirds came from China commerce. Cainiao is the fourth-largest revenue source after China commerce, cloud services, and international commerce.
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