Alibaba raises stake in logistics arm Cainiao for additional $3.3 billion

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(Image credit: Alibaba)

Alibaba Group announced an additional RMB 23.3 billion ($3.3 billion) investment in its affiliate Cainiao Smart Logistics, boosting its holdings in the logistic unit to approximately 63% from 51%.

Why it matters: The move highlights Alibaba’s ambition in building an efficient delivery logistics network, which is an increasingly important component to its enterprise-faced initiative Alibaba Business Operating System.

  • In addition to Cainiao, the company holds stakes in other large Chinese couriers like STO Express, ZTO Express, YTO Express, and Best.
  • The investment comes just days before China’s Nov. 11 Singles’ Day shopping festival, which usually a peak time for parcel delivery in China.

Logistics is a key pillar of the Alibaba Business Operating System. It allows us to offer the best service to customers and to effectively advance our New Retail strategy. Cainiao strives to enhance service and user experience for merchants and consumers through superior technology and digital solutions, both within China and around the world. We are committed to supporting its ongoing development, to realizing greater synergies throughout the entire Alibaba Economy and accelerating digitization of the logistics industry.”

⁠—Daniel Zhang, Alibaba Group Executive Chairman and CEO in a statement emailed to TechNode

Details: Alibaba will acquire the shares by subscribing for newly issued Cainiao ordinary shares in its latest financing round and purchasing an equity interest from an existing Cainiao shareholder.

  • Other existing shareholders also participated in the fundraising but the company did not disclose the names.
  • The additional investment from Alibaba Group is “a vote of confidence in Cainiao,” according to the firm.
  • The new funding will help Cainiao continue its investment in technologies and logistics infrastructure services.
  • Cainiao’s global fulfillment serive is expected to support Alibaba’s international e-commerce business, including Tmall Global, AliExpress and Lazada.

Context: In 2013, Alibaba co-founded Cainiao alongside eight partners, including five Chinese logistics companies. Previously, Alibaba had only relied on third-party couriers for its e-commerce operations.

  • Alibaba Group raised its stake to a majority 51% in Cainiao from 47% in 2017.