Alibaba logistics arm files for $1bn IPO

Cainiao first unit to go public since e-commerce giant announced plans to split up

The logistics arm of Alibaba Group Holding Ltd has filed for an initial public offering in Hong Kong, potentially making it among the first of the Chinese e-commerce leader’s units to go public.

Citic Securities, Citigroup and JPMorgan Chase are joint sponsors of the offering by Cainiao Smart Logistics Network Ltd, according to the preliminary prospectus posted on the stock exchange website Tuesday. 

The document did not provide details of the offering terms. The first-time share sale could raise at least US$1 billion, people familiar with the matter have said.

Hangzhou-based Alibaba intends to retain more than 50% of the shares in Cainiao and keep it as a subsidiary, the filing said.

The application could result in Cainiao pulling ahead of other Alibaba units on the path to separate listings, following the parent’s surprise announcement in March that it would split up the business.

Separately, Alibaba is putting the Hong Kong IPO of its Freshippo grocery chain on the back burner amid weak sentiment for consumer stocks in China. The tech firm is prioritising the listings of other units, Bloomberg News reported earlier.

Alibaba is in the midst of a historic overhaul, splitting up into six main units and transitioning to new leadership under recently appointed chief executive officer Eddie Wu.

His predecessor, Daniel Zhang, stepped down as chair and CEO to focus on Alibaba’s cloud division, and then months later, relinquished those duties as well to take on a brand-new investment fund.

Alibaba co-founded Cainiao in 2013, using it as the delivery backbone for its Chinese online marketplaces. The unit followed Alibaba’s footsteps into the global e-commerce arena, handling parcels for millions of merchants and brands on platforms like AliExpress and on the Alibaba-owned Lazada in Southeast Asia.

Cainiao, which means “rookie” or “amateur” in Chinese, promises to deliver packages in China within 24 hours and anywhere else in the world in 72 hours.

The company now considers international express delivery a major driver for growth and serves over 100,000 merchants and brands to deliver more than 1.5 billion cross-border e-commerce parcels a year, it said in its prospectus. 

Revenue from Alibaba Group accounted for 30% of Cainiao’s sales over the past three fiscal years. Average daily parcel volume increased from 700,000 in 2017 to 4.8 million in 2023, it said.

Cainiao’s revenue for the three months ended June 30 rose 34% to 23.16 billion yuan ($3.2 billion). The company reported net profit of 391 million yuan for the quarter, compared with a net loss of 338 million in the same time last year.