Cainiao Network Technology, the logistics subsidiary of Alibaba, is planning to raise up to US$2 billion through an initial public offering (IPO) in Hong Kong, likely in early 2024. This move aims to support the revitalization of the capital markets in the Asian financial hub, according to sources familiar with the matter.
Alibaba had previously announced its intention to divide its business into six separate units, with most of them considering capital raising or market debuts to fund their future growth, reported Reuters.
Cainiao has already commenced preparations for its IPO and is targeting a fundraising amount between US$1 billion and US$2 billion in Hong Kong, three sources said. These sources requested anonymity as the listing discussions are confidential.
While the specific details of the IPO have not been previously reported, two of the sources indicated that it is expected to launch in early 2024. However, it should be noted that the plans are still subject to potential changes, as cautioned by the sources.
When approached for comment, Cainiao refrained from providing any statements regarding market speculations. Likewise, Alibaba did not respond to a request for comment.
Alibaba, renowned as a major online marketplace connecting buyers and sellers, has previously acquired stakes in leading express delivery companies to ensure reliable services within its group.
In 2013, Alibaba co-founded Cainiao with partners such as department store owner Intime Group, conglomerate Fosun Group, and several logistic firms. Four years later, Alibaba gained control of Cainiao and increased its stake from 47% to 67%.
Cainiao primarily focuses on providing software and sharing data with warehouses, carriers, and logistics firms. Its revenue for the nine months ended in December amounted to 42 billion yuan (US$6.07 billion), marking a 22% year-on-year increase and accounting for 6% of Alibaba’s total revenue.
The logistics subsidiary’s IPO plan is the first public report of the anticipated capital raisings for Alibaba’s spin-off units, as the company embarks on its largest restructuring endeavor in its 24-year history. Industry analysts believe that this breakup could alleviate the scrutiny faced by Chinese billionaire Jack Ma’s expansive business empire, which has been under regulatory scrutiny in China as part of a broader crackdown on private enterprises since late 2020.
Apart from Cainiao, the other five units resulting from Alibaba’s restructuring include Cloud Intelligence, Taobao Tmall Commerce, Local Services, Global Digital Commerce, and Digital Media and Entertainment.
Market insiders anticipate that Cainiao’s prospective IPO, followed by potential market debuts from other Alibaba units in the near future, could rejuvenate sluggish fundraising activities in Hong Kong.
Although Alibaba has not disclosed the potential listing venues for its other units, bankers suggest that Hong Kong would be a preferred destination due to its proximity to the company’s domestic market and ongoing tensions between China and the United States.
According to Refinitiv data, approximately US$1.5 billion has been raised through IPOs in Hong Kong thus far in the current year, slightly surpassing the US$1.2 billion raised during the same period last year.
Craig Coben, former head of Bank of America’s Asia-Pacific capital markets business, expressed confidence that major global investors would take an interest in the Alibaba spin-offs. However, he acknowledged that valuation could pose a challenge due to the losses suffered by global investors in high-growth Chinese stocks.