Alibaba’s logistics arm aims to raise up to $2 billion via a listing in Hong Kong likely early next year, sources with knowledge of the matter said.
The initial public offering (IPO) plan for the unit – Cainiao Network Technology – comes after Alibaba said in March it would split its business into six units, raising hopes that a Chinese regulatory crackdown on domestic firms was coming to an end.
Dealmakers hope that Cainiao’s potential IPO, expected to be followed by market debuts from some of the other Alibaba units in the near-term, could help revive sluggish fundraising activities in Hong Kong.
Craig Coben, the former head of Bank of America’s Asia-Pacific capital markets business, said the Alibaba spin-offs would be on the radar of major global investors.
Alibaba had said most of them would explore capital fundraisings or market debuts to help fund future growth.
“There will be international demand for these assets, although valuation may be a challenge given the losses that global investors have suffered from high-growth Chinese stocks,” Coben said.
While Alibaba has not divulged potential listing venues for the other units, bankers say that Hong Kong would be a preferred destination because of its proximity to the group’s home market and Sino-US tensions.
Sizeable share in Alibaba revenue
The planned IPO, the size of which has not been reported before, is likely to be launched in early 2024, two sources said. They cautioned, however, that the plans are not yet final and remain subject to changes.
Alibaba, which acts as a massive online marketplace for buyers and sellers, has in past years picked up stakes in top express delivery players to ensure reliable services for the group.
It co-founded Cainiao in 2013 with partners including department store owner Intime Group, conglomerate Fosun Group and a handful of logistic firms. Alibaba took control of Cainiao four years later and has lifted its stake to 67% from 47%.
Cainiao, which provides software and shares data with warehouses, carriers and logistics firms, reported 42 billion yuan ($6.07 billion) in revenue in the nine months ended December, up 22% year-on-year and accounting for 6% of Alibaba’s total revenue.
The logistics arm’s IPO plan is the first of the expected capital raisings for Alibaba’s spun-off units to be reported publicly as it pursues the biggest restructuring in its 24-year history.
Analysts have said that the breakup could ease scrutiny over Chinese billionaire Jack Ma’s sprawling business empire, which has been a target of local regulators as part of a broader crackdown on private enterprises since late 2020.
The other five units include Cloud Intelligence, Taobao Tmall Commerce, Local Services, Global Digital Commerce and Digital Media and Entertainment.
- Reuters, with additional editing by Vishakha Saxena