The Cainiao Network Technology unit’s initial public offering (IPO) plan comes after Alibaba said in March that it would split its operations into six parts, raising expectations that a Chinese regulatory downturn on local firms was coming to an end.
Besides, dealmakers hope that Cainiao’s potential IPO, anticipated to be followed by market debuts from some of the other Alibaba units in the forthcoming, could help recover fatigued fundraising activities in Hong Kong.
Craig Coben, former head of Bank of America’s Asia-Pacific capital markets business, said “the Alibaba spin-offs would be on the radar of major global investors.”
However, Alibaba had also said most of them would explore capital fundraisings or market debuts (the pre-market phase of the offering) to help fund future development.
“There will be international demand for these assets, although valuation may be a challenge given the losses that global investors have suffered from high-growth Chinese stocks,” Coben said.
While Alibaba has not disclosed prospective listing locations for the other subsidiaries, bankers believe Hong Kong would be a desirable destination due to the group’s proximity to its home market and Sino-US tensions.
A Significant share of Alibaba’s revenue
Moreover, the planned IPO, the size of which has not been reported before, is estimated to be launched in the first quarter of 2024, two sources associated with the matter said. However, they also cautioned that the plans are not yet final and remain subject to change.
In recent years, Alibaba, which operates a large online marketplace for buyers and sellers, has also acquired interests in top-tier express delivery companies to ensure they can provide dependable services to the company.
Cainiao was co-founded by Alibaba in 2013 with partners including department store owner Intime Group, Fosun Group, and a handful of well-known logistic institutions.
Furthermore, Alibaba took control of Cainiao for four years and has surged its stake to 67% from 47%.
Cainiao, which provides software and data sharing to warehouses, carriers, and logistics firms, reported 42 billion yuan ($6.07 billion) in sales in the nine months ending December, increasing 22% year on year and accounting for 6% of total revenue at Alibaba.
The logistics arm’s IPO plan is the initial of the anticipated capital raisings for Alibaba’s reeled-off units to be reported publicly as it engraves the biggest restructuring in its 24-year history.
Furthermore, the analysts proclaim that the breakup could ease investigations into Chinese billionaire Jack Ma’s unkempt business empire, which has been a target of local chancellors as part of a broader downfall on private enterprises since late 2020.
Besides, the other five planned units include Cloud Intelligence, Local Services, Taobao Tmall Commerce, Global Digital Commerce and Digital Media and Entertainment.
- Published By Team Genuine Reporter