Alibaba cancels HK IPO plan for logistics arm Cainiao

Alibaba has withdrawn an initial public offering (IPO) listing application for its logistics arm Cainiao (菜鳥) on the Hong Kong Stock Exchange (HKEX).

According to Alibaba's filing on the HKEX, it has planned to align part of Cainiao’s business to better realise strategic synergies with Alibaba’s subsidiaries Taobao, Tmall Group, and Alibaba International Digital Commerce Group, as well as support Cainiao to execute a long-term strategic expansion of its global logistics network. 

Joe Tsai, chairman of Alibaba Group, said on the company's conference call yesterday (26 March 2024) that the decision to withdraw Cainiao’s IPO was based on strategic considerations and the stage of the Cainiao’s IPO process.

In terms of strategic considerations, Tsai said Cainiao provides unique value-added logistics services to Alibaba's eCommerce business. After evaluation, it was determined that it is necessary to deepen the integration between Cainiao's operations and the group's eCommerce operations to deliver the most competitive consumer experience.

Tsai added that Alibaba must regain market share and drive business growth to fulfill its primary goal of succeeding in the eCommerce field, according to the reports. 

When it comes to the stage of Cainiao’s IPO process, Tsai said while the financial information in the prospectus has just expired yesterday, a decision on the next steps must be made on the same day. 

Considering the strategic considerations of Cainiao and the challenging IPO market environment, it was believed that any achievable valuation of Cainiao would not adequately reflect its true strategic value. Alibaba has emphasised that the decision to withdraw was purely an internal decision and regulatory factors did not play a role, according to the reports. 

Don't miss: Alibaba reportedly mulls selling Freshippo and RT-Mart

Back in February, Alibaba was reportedly seeking to sell multiple consumer industry assets, including its grocery business Freshippo (盒馬鮮生) and retail chain RT-Mart (大潤發).

According to Reuters, three people with knowledge of the situation said that Alibaba has been focusing on its core eCommerce business for profitability while spinning off non-core loss-making divisions.

However, Alibaba said while it will proceed with the sale of some of its non-core assets, those related to the express delivery sector are not within the scope of consideration, according to HK01. 

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