China's Alibaba kicks off restructuring with plan to list logistics arm in Hong Kong

[September 26, 2023]  By Brenda Goh
 
(Reuters) -Alibaba Group on Tuesday kicked off its restructuring with a plan to list its logistics arm Cainiao in Hong Kong that would make the unit the first to be separated since the Chinese e-commerce giant announced its break-up six months ago.  

People visit the booth of Alibaba's logistics unit Cainiao at the 2021 China International Fair for Trade in Services (CIFTIS) in Beijing, China September 3, 2021. REUTERS/Florence Lo

Alibaba said on Tuesday it had submitted an application to spin off Cainiao Smart Logistics Network to the Hong Kong stock exchange, but that financial terms such as the size of the offering had not been finalised.

However, Alibaba, which holds a 69.54% stake in Cainiao, will continue to hold more than 50% of shares in Cainiao and it will remain a subsidiary of the company after the spin-off, Alibaba added.

Reuters reported in May that Cainiao aimed to raise between $1 billion and $2 billion. Since Alibaba co-founded Cainiao in 2013 with partners including department store owner Intime Group and some logistics firms, the unit has become a major logistics provider in its own right in China, serving third-party customers as well as Alibaba.

Dealmakers have said that they hope Cainiao's IPO, expected to be followed by market debuts from other Alibaba units in the near-term, will revive sluggish fundraising activities in Hong Kong.

U.S.-listed shares of Alibaba pared early premarket trading losses following Tuesday's announcement and were down 0.4% at $86.86 by 1037 GMT.

Alibaba in late March announced its biggest restructuring in its 24-year history. It will adopt a holding company management model and split its business into six units, most of which will explore capital increases or market debuts to fund growth.

The revamp was announced a day after Alibaba founder Jack Ma returned home from a year-long stay abroad, and it dovetailed with Beijing's efforts to spur growth in the private sector after two years of crackdown.

In the months since, the company has approved a process to start external financing for its international commerce arm and was also looking to list its cloud unit.

The cloud unit, however, was hit earlier this month by the sudden departure of Daniel Zhang, who had initially left his roles as CEO and chairman of the group to concentrate his focus on the cloud business.

(Reporting by Brenda Goh and Ayushman Ojha; Editing by Varun H K and Barbara Lewis)

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