Fintech

Alibaba Break-Up Gets Underway With Cainiao Listing Move

 

Alibaba’s plan to break off its six units, in what would be the biggest restructuring in its 24-year history, got underway on Tuesday when it announced it will list its logistics arm Cainiao in Hong Kong.

The move would make the unit the first to be separated since the Chinese e-commerce giant announced its break-up proposal six months ago.

Alibaba said on Tuesday it had submitted an application to spin off Cainiao Smart Logistics Network to the Hong Kong stock exchange, but that financial terms such as the size of the offering had not been finalised.

However, Alibaba, which holds a 69.54% stake in Cainiao, will continue to hold more than 50% of shares in Cainiao and it will remain a subsidiary of the company after the spin-off, Alibaba added.

 

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Reuters reported in May that Cainiao aimed to raise between $1 billion and $2 billion. Since Alibaba co-founded Cainiao in 2013 with partners including department store owner Intime Group and some logistics firms, the unit has become a major logistics provider in its own right in China, serving third-party customers as well as Alibaba.

Dealmakers have said that they hope Cainiao’s IPO, expected to be followed by market debuts from other Alibaba units in the near-term, will revive sluggish fundraising activities in Hong Kong.

US-listed shares of Alibaba pared early premarket trading losses following Tuesday’s announcement and were down 0.4% at $86.86 by 1037 GMT.

Alibaba in late March announced its biggest restructuring in its 24-year history. It will adopt a holding company management model and split its business into six units, most of which will explore capital increases or market debuts to fund growth.

The revamp was announced a day after Alibaba founder Jack Ma returned home from a year-long stay abroad, and it dovetailed with Beijing’s efforts to spur growth in the private sector after two years of crackdown.

In the months since, the company has approved a process to start external financing for its international commerce arm and was also looking to list its cloud unit.

The cloud unit, however, was hit earlier this month by the sudden departure of Daniel Zhang, who had initially left his roles as CEO and chairman of the group to concentrate his focus on the cloud business.

 

  • Reuters with additional editing by Sean O’Meara

 

Read more:

New Alibaba CEO Wants Focus on AI, ‘Young Employees’ At Helm

Alibaba Stock Slips On Daniel Zhang’s Sudden Cloud Unit Exit

Alibaba, Tencent Shares Rise as China Tech Crackdown Nears End

China’s Alibaba Approves Spinoff of Cloud Computing Business

Alibaba Plans $2bn HK IPO For Newly Spun-Off Logistics Unit

 

 

Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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