(Bloomberg) — Cainiao Smart Logistics Network Ltd., the logistics arm of Alibaba Group Holding Ltd., has filed to go public in Hong Kong, potentially becoming one of the Chinese e-commerce leader’s first units to go public.
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Citic Securities Co., Citigroup Inc. and JPMorgan Chase & Co. are joint sponsors of the offering, according to the preliminary prospectus posted on the exchange’s website on Tuesday.
The document, which confirmed an earlier Bloomberg report on the timing of Cainiao’s filing, did not provide details on the terms of the offer. The initial share sale could raise at least $1 billion, people familiar with the matter say.
According to another filing on Tuesday, the Hong Kong Stock Exchange confirmed that the company can proceed with the planned spin-off and initial public offering of Cainiao. Hangzhou-based Alibaba intends to retain more than 50% of the unit’s shares and retain Cainiao as a subsidiary, the filing said.
The filing could see Cainiao leapfrog other Alibaba units toward separate IPOs after the parent company’s surprise announcement in March that it would split the business. Additionally, Alibaba is postponing the IPO of its Hong Kong grocery chain Freshippo amid weak sentiment for consumer stocks in China. As Bloomberg News previously reported, the technology company is prioritizing listing of other units.
Alibaba is in the midst of a historic restructuring, splitting into six major units and assuming new leadership under recently appointed Chief Executive Officer Eddie Wu. His predecessor, Daniel Zhang, stepped down as chairman and CEO to focus on Alibaba’s cloud division, then months later gave up those duties as well to take on a brand new investment fund.
Alibaba co-founded Cainiao in 2013 and used it as the delivery backbone for its Chinese online marketplaces. The unit followed Alibaba’s footsteps into the global e-commerce space, fulfilling packages for millions of merchants and brands on platforms such as AliExpress and Lazada from Southeast Asia.
Cainiao, which means “newbie” or “amateur” in Chinese, promises to deliver packages in China within 24 hours and anywhere in the world within 72 hours.
The company now views international express delivery as a key growth driver, serving over 100,000 retailers and brands to deliver more than 1.5 billion cross-border e-commerce packages annually, its prospectus says.
Alibaba Group’s revenue accounted for 30% of Cainiao’s sales in the last three fiscal years, and average daily package volume increased from 0.7 million in 2017 to 4.8 million in 2023, it said.
Cainiao’s revenue rose 34% to 23.16 billion yuan ($3.2 billion) in the three months ended June 30. The company reported a net profit of 391 million yuan for the quarter, compared with a net loss of 338 million yuan in the same period last year.
Adjusted Ebitda, a measure of operating profit that strips out one-time items and the impact of stock awards, rose 185% from a year earlier to 1.81 billion yuan.
(Updates with financial results in last two paragraphs)
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