Cainiao Network Technology, the logistics arm of Alibaba Group Holding, has started preparations to become the first of the tech giant’s six units to go public, Caixin learned from multiple market participants.
Cainiao is in talks with banks for an initial public offering in Hong Kong, the sources said. Several investment banks including China International Capital Corp. expressed interest in underwriting Cainiao’s share sale, these people told Caixin.
In response to an inquiry, the Alibaba unit said there’s no clear IPO plan or timetable.
In late March, Alibaba unveiled a historic business overhaul in which it will split its USD 220 billion business into six units with independent decision-making on financing and share sales. The company said each new business unit would have independence in raising capital and selling stock to the public.
On a conference call after the announcement on March 30, Alibaba Chief Financial Officer Toby Xu said qualified business units would go ahead with IPOs once they are ready.
Cainiao originally planned to go public in 2022 during an earlier fundraising phase, according to a Hong Kong investment banker who participated in Alibaba’s Hong Kong listing.
Among the six business groups — which also include Cloud Intelligence, Taobao Tmall Commerce, Local Services, Global Digital Commerce, and Digital Media and Entertainment — Cainiao has the most mature conditions for an IPO, according to market participants.
Amid the current frenzy over artificial intelligence, Alibaba’s cloud business has entered a new round of big investment, which may delay its IPO. The Global Digital Commerce operation faces overseas compliance risks, which will mean greater scrutiny once it goes public, analysts said.
Cainiao is reorganizing its board of directors, and capital market matters need to move forward after the new board is formed, according to a person close to the company. The chairman will probably be Joseph Tsai, the person said. Tsai currently serves as executive vice chairman of Alibaba. He is also one of the founding partners of Alibaba and a non-executive director of Cainiao.
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In 2013, Alibaba worked with a group of partners to establish Cainiao as its logistics network. The partners included five major Chinese delivery companies — YTO Express, SF Express, ZTO Express, Yunda, and Shentong Express. Alibaba founder Jack Ma acted as Cainiao’s chairman and positioned the operation as one of Alibaba’s three most important strategic businesses.
In 2015, Cainiao completed an RMB 10 billion (USD 1.46 billion) fundraising from investors including Singaporean state-owned investment firm Temasek and Malaysian sovereign wealth fund KNB. The logistics business was valued at RMB 132.4 billion (USD 19.2 billion) in 2017. Alibaba owns 67% of the unit, according to the 2022 annual report.
Cainiao has yet to make a profit. The company reported a net loss of RMB 984 million (USD 142 million) in 2022 and a net loss of RMB 1.14 billion (USD 170 million) in 2021. The business contributed about 7% of Alibaba’s revenue last year.
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