Alibaba Group has initiated its restructuring process by unveiling plans to list its logistics subsidiary, Cainiao Smart Logistics Network, on the Hong Kong stock exchange. This move marks the first separation of a unit since Alibaba announced its corporate overhaul six months ago.
Alibaba confirmed its submission of an application for the spin-off of Cainiao to the Hong Kong Stock Exchange. However, specific financial details, such as the size of the offering, have not yet been finalized. Notably, even after the spin-off, Alibaba will retain a majority ownership, holding more than 50% of Cainiao's shares, and Cainiao will remain a subsidiary of Alibaba.
Back in May, it was reported that Cainiao aimed to raise between $1 billion and $2 billion through its IPO.
Cainiao, co-founded by Alibaba in 2013 in collaboration with partners including Fosun Group and various logistics firms, has since grown into a significant independent logistics provider in China. It serves both third-party customers and Alibaba itself.
According to Cainiao's prospectus, Alibaba contributed to approximately 30% of its total revenue during its financial reporting years between 2021 and 2023, and in the three months ending in June. Conversely, revenue generated by Cainiao accounted for around 10% of Alibaba's total revenue in the latest quarter.
This IPO is anticipated to pave the way for market debuts from other Alibaba units, which could potentially stimulate fundraising activities in Hong Kong.
Cainiao is required to file with the China Securities Regulatory Commission within three working days of its Hong Kong IPO filing and secure regulatory approval before proceeding with the offering.
Citigroup, Citic Securities, and JPMorgan have been appointed as joint sponsors for Cainiao's IPO.
Since its establishment in 2015, Cainiao has raised a total of ¥31 billion ($4.24 billion) through three funding rounds. Other investors include Primavera Capital, Singapore's sovereign wealth fund GIC, Temasek, and Malaysia's Kazanah Nasional.
Following the announcement of the Cainiao IPO, Alibaba's US-listed shares experienced a 1% decrease, trading at $86.35 as of 13:14 GMT.
In late March, Alibaba unveiled its most extensive restructuring initiative in its 24-year history. This restructuring involves adopting a holding company management model and dividing its business into six units, many of which will explore capital increases or market debuts to fund its growth. The restructuring coincided with the return of Alibaba's founder, Jack Ma, from a year-long absence and aligned with Beijing's efforts to boost private sector growth after two years of regulatory crackdowns.
Subsequently, Alibaba has embarked on external financing for its international commerce arm and explored listing its cloud unit, although the latter was affected by the sudden departure of Daniel Zhang, who had initially stepped down as CEO and chairman to focus on the cloud business.
Hong Kong's IPO market has faced persistent weakness in 2023, with less than $3 billion worth of IPOs in the first nine months, compared to $4 billion during the same period last year. Analysts attribute this trend to higher global interest rates and new regulations imposed by Chinese authorities on companies seeking overseas listings.
