Alibaba scraps planned IPO of Cainiao logistics unit to focus on e-commerce

26 March 2024 , 15:38

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Alibaba, the Chinese e-commerce giant, has decided to cancel its planned public listing of its logistics unit, Cainiao, in Hong Kong (Image: Copyright 2021 The Associated Press. All rights reserved)

Alibaba, the Chinese e-commerce giant, has decided to cancel its planned public listing of its logistics unit, Cainiao, in Hong Kong.

Instead, it plans to buy all remaining shares of Cainiao Smart Logistics Network. This move values Cainiao at a $10.3billion. Alibaba already owns 64% of the logistics unit and this offer will allow smaller shareholders to sell their shares to Alibaba.

Joe Tsai, chairman of Alibaba Group, said: "Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building out a global logistics network, we believe this is an appropriate time to double down on Alibaba's investment in Cainiao."

The company said that the current market conditions wouldn't likely give a valuation that reflects Cainiao's strategic value to Alibaba's business. This decision comes as Alibaba focuses more on growing its cloud computing and e-commerce businesses, especially with competition from rivals like PDD's Pinduoduo and ByteDance's Douyin, who often offer products at lower prices.

Cainiao, which manages a lot of Alibaba's online shopping logistics, also runs a worldwide logistics network that aids international e-commerce. Alibaba reorganised its businesses last March, dividing them into six units that would eventually raise their own capital and go public.

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It was thought that its cloud unit would be among the first to hold an initial public offering, but Alibaba later cancelled plans to spin-off the business, citing uncertainties over U.S. export curbs on advanced chips used for artificial intelligence.

Lawrence Matheson