Alibaba Files for Potential $2B Hong Kong IPO of Cainiao Logistics Division

Alibaba Files for Potential $2B Hong Kong IPO of Cainiao Logistics Division

A Cainiao warehouse in mainland China

A Cainiao warehouse in mainland China

Alibaba has filed for an initial public offering of shares in its Cainiao logistics unit on the Hong Kong exchange, a filing late Tuesday shows, after the company had announced plans for the listing in May.

Financial details of the funding exercise have not yet been released, but a Reuters report in May said the company plans to raise from $1 billion to $2 billion. Alibaba, which currently owns just less than 70 percent of the warehouse and distribution company, said it will retain a stake of over 50 percent following the offering.

The IPO will be the first of an Alibaba unit since the company in March announced a restructuring that would spin off many of its businesses into separate entities. Cainiao’s market debut is being set up during a tough time for the HKEX, which has seen IPO volumes slide by around a quarter this year from 2022’s already depressed levels.

Cainiao suffered a loss attributable to owners of the company of RMB 2.3 billion ($314.7 million) in the 12 months ending 31 March, which was up from RMB 2.0 billion in the preceding one year period. Revenue for the year ending 31 March was RMB 77.8 billion, jumping from RMB 66.9 billion in the preceding 12 months.

Distribution Dollars

In addition to Alibaba’s stake, substantial shareholders in Cainiao include a trust founded by Yintai Group chairman Guo Shenjun, who formerly served as executive chairman of the logistics firm, with the trust holding 14.6 percent of the company heading into the IPO.

Joe Tsai - Alibaba

Joe Tsai is lining up his sheds for a Hong Kong IPO

Other investors in Cainiao include mainland fund manager Primavera Capital, Singapore’s GIC and Temasek Holdings and Malaysia’s Khazanah Nasional Berhad, with the company having raised RMB 31 billion as a private entity, according to the IPO filing.

Cainiao provides supply chain, logistics and delivery services to consumers and merchants that are clients of Taobao, Tmall and Alibaba’s international digital commerce group, as well as third-party customers.

From 2021 through 2023 Cainiao generated about 30 percent of its revenue from serving Alibaba, while also contributing around 10 percent of Alibaba’s top line.

Citigroup, Citic Securities and JPMorgan have been appointed joint sponsors of the IPO, which must still win approval from the China Securities Regulatory Commission.

Established in 2013 and now chaired by Joseph Tsai, the Taiwan-born Canadian businessman and Alibaba co-founder, Cainiao aims to deliver anywhere in China within 24 hours and across the globe within 72 hours. Tsai also serves as chairman of Cainiao and executive vice chairman of Alibaba, in addition to performing his duties as the owner of US sports franchises including basketball’s Brooklyn Nets.

Listing Hurdles

The news of Cainiao’s planned IPO comes amid challenging times for Hong Kong listings, after the HKEX turned in one of the worst showings among global bourses in 2022 and the exchange’s biggest IPO of 2023 — KKR-backed baiju distiller ZJLD — flopped in its April debut.

Dalian Wanda Group, the country’s largest commercial developer in July filed a fourth time for a listing on the HKEX after three previous filings failed to win approval.

Some firms continue to move forward with listing plans, however, with SF Holdings, China’s largest express delivery firm, aiming for a Hong Kong IPO within this year which could raise up to $3 billion.

Last month the company seen as China’s answer to FedEx revealed that it has added China International Capital Corporation and UBS as overall coordinators and financial advisors for what could be the bourse’s biggest IPO this year.

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