According to insiders, Alibaba’s (9988. HK) logistics business plans to list in Hong Kong early next year to raise $2 billion, supporting prospects for a capital markets recovery in the Asian financial hub.
Cainiao Network Technology’s IPO comes after Alibaba said in late March that it would separate its business into six subsidiaries and that most would pursue capital raisings or market debuts to support future expansion.
Three sources said Cainiao, which has initiated the IPO, wants to raise $1 billion to $2 billion in Hong Kong. They declined to be named since listing discussions are secret.
Two sources indicated the unannounced IPO will launch in early 2024. Sources warned that the plans may alter. Cainiao declined the market speculation remark.
Alibaba refused to comment.
Alibaba, an online platform for consumers and sellers, has invested in leading fast-delivery companies to provide dependable services for the company.
In 2013, it co-founded Cainiao with department store owner Intime Group, conglomerate Fosun Group, and many logistic enterprises. Four years later, Alibaba acquired 67% of Cainiao from 47%.
In the nine months ending December, Cainiao, which offers software and data to warehouses, carriers, and logistics businesses, earned 42 billion yuan ($6.07 billion), rising 22% year-over-year and accounting for 6% of Alibaba’s overall income.
Alibaba’s logistics arm’s IPO is the first of its spun-off companies’ scheduled capital raises as it undergoes its largest restructuring in 24 years.
Since late 2020, local officials have targeted Chinese billionaire Jack Ma’s huge corporate empire as part of a larger assault on private firms. Analysts say the breakup might alleviate attention.
The other five are Cloud Intelligence, Taobao Tmall Commerce, Local Services, Global Digital Commerce, and Digital Media and Entertainment.
Dealmakers anticipate Cainiao’s potential IPO, followed by Alibaba’s other affiliates’ market debuts, will boost Hong Kong’s fundraising.
Bankers think Hong Kong is a likely listing location for the other units because of its closeness to Alibaba’s home market and Sino-U.S. tensions.
According to Refinitiv statistics, Hong Kong IPOs have raised $1.5 billion this year, up from $1.2 billion last year.
Former Bank of America Asia-Pacific capital markets chief Craig Coben said significant global investors would watch the Alibaba spin-offs.
“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,” he added.
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