Alibaba confirms Hong Kong IPO plan for logistics unit

Alibaba owns 69.54% of Cainiao Smart Logistics Group and it expects to retain more than 50% following the spin-off via IPO, according to a filing.

Guojun Shen, the founder of Chinese real estate and resources conglomerate Yintai Group, is the largest external shareholder with 14.59%. Yunfeng – a private equity firm established by Jack Ma, co-founder of Alibaba – has 4.54%, Fosun International has 3.67%, Primavera has 1.53%, Princeville has 0.23%, GIC has 1.15%, Temasek has 0.77%, and Khazanah has 0.38%.

Cainiao completed three rounds of private funding: CNY 10bn (USD 1.37bn) in 2016, CNY 6bn in 2017, and CNY 15bn in 2019. Alibaba accounted for 70% of the CNY 31bn raised overall. Yunfeng and Primavera’s contributions were CNY 2.18bn and CNY 763m, respectively. At the time, the third round was said to have been a USD 3.3bn capital injection by Alibaba.

The company was established in 2013, initially as a digital platform to connect a network of express delivery companies in China. There were eight founding shareholders: Alibaba, Shen, Fosun, Forchn Holdings Group, and four of China’s largest logistics operators, STO Express, YTO Express, Yunda Express, and ZTO Express. The latter four still feature in the cap table with stakes of less than 1%.

Cainiao now describes itself as the largest provider of cross-border e-commerce logistics services globally and a market leader in China logistics services. The company has evolved from a pure technology platform into a logistics network with end-to-end capabilities, including cross-border delivery, global supply chain management, line haul, and last-mile delivery.

In China, it operates Cainiao Post, which offers parcel pick-up and doorstep delivery as well as various other value-added services.

As of June, the company’s logistics network comprised two e-hubs with a gross floor area of more than 150,000 square metres, 1,100 warehouses covering 16.5m sqm, and 300 sorting centres. This operation, which spans 200 countries and regions, was linked by 170 weekly chartered flights, 2,700 line-haul trucking routes, 4,400 delivery stations, and 170,000 pick-up and drop-off stations.

Revenue reached CNY 77.8bn for the 12 months ended March 2023, up from CNY 66.9m a year earlier. Alibaba's e-commerce platforms like Tmall and Taobao are responsible for nearly one-third of revenue. Cainiao’s net loss widened from CNY 2.3bn to CNY 2.8bn.

The spin-off is part of Alibaba’s plan 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.

Cainiao and Freshippo – operator of the Hemma technology-enabled grocery store chain – are expected to 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.

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• Topics
• Greater China
• IPO
• Support services
• China
• Logistics
• Alibaba Group
• Yunfeng Capital
• Primavera
• GIC Private
• Temasek Holdings
• Khazanah Nasional
• Princeville Capital