Alibaba said Tuesday that it would spin off Cainiao, its logistics arm, in what will be the conglomerate’s first initial public offering since it announced a sweeping revamp of its business earlier this year.
Alibaba Group (BABA) said in a regulatory filing that it had received regulatory approval to list Cainiao Smart Logistics Network on the Hong Kong Stock Exchange, though it did not specify a date or the price of Cainiao’s shares.
The Chinese e-commerce and cloud services giant will remain Cainiao’s majority shareholder, though it will reduce its current 70% stake to a 50% holding, according to the filing. Cainiao will remain a subsidiary of Alibaba.
Founded in 2013, Cainiao operates a global logistics network and provides delivery services for Alibaba and other firms. Its revenue rose 34% in the three months to the end of June compared with the same period in 2022, according to its IPO prospectus, published Tuesday.
The IPO announcement comes six months after Alibaba said it planned to split its business into six separate units, each overseen by its own chief executive and board of directors.
The break-up would allow five of those units “the flexibility to raise outside capital and potentially to seek its own IPO,” the company said in a statement at the time.
Alibaba is now beginning to follow through with the most ambitious restructuring in its 24-year history, under new leadership.
Eddie Wu, who became chief executive earlier this month, has said the company must embrace artificial intelligence, and promote younger people to senior management, to ensure it can continue to grow in the face of a challenging economic environment and rising competition.
Cainiao’s listing could provide a much-needed boost to Hong Kong’s beleaguered IPO market. Once among the top five IPO destinations in the world based on the amount of equity raised, Hong Kong lost that status this year, according to data provider Dealogic.
Perris Lee, who focuses on Asian equity capital markets at Dealogic, told CNN in May that the city’s IPO market had been held back by poor valuations and the legacy of strict Covid lockdowns.
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