Alibaba augments its logistics arm by buying stake in STO Express

The two companies plan to work together in new retail too.

Alibaba Group will indirectly invest RMB 4.66 billion (US$693.2 million) in a major Chinese courier, STO Express, the latter’s latest filing with the Shenzhen Stock Exchange shows.

The investment will enable Alibaba to hold a 14.65% stake in STO Express.

Shanghai Deyin Investment Holding Limited Company, which controls 53.76% of STO Express, will set up two new subsidiaries and transfer 29.9% of the Shenzhen-listed courier’s shares to one, and 16.1% of shares to the other.

Alibaba Group’s investment represents a 49% stake in the first Deyin subsidiary.

According to STO Express’ filing, after the transaction, Alibaba and the courier will explore further collaboration in areas including logistics technology, parcel distribution, and logistics solutions for new retail, which combines online and offline retail.

STO Express’ share price rose to RMB 22.48 on Monday morning, up by 9.98% from Friday’s close. The share prices of companies listed in Shenzhen are only allowed to rise or fall by at most 10% within a trading day.

Later via WeChat account, Alibaba explained its aspirations in investing in logistics industry, saying that it hopes, along with all parties, to cut logistics costs from accounting for 16% of China’s GDP to 5% to improve efficiency of the manufacturing industry.

It added that it hopes to increase employment in logistics industry, and also increase the sense of happiness and achievement for people working in this sector.