Report: Alibaba Preparing IPO for $20 Billion Logistics Unit
China’s Alibaba Group is reportedly planning to take its logistics business public.
The tech giant is in discussions with banks for an initial public offering (IPO) for its Cainiao Smart Logistics Group on the Hong Kong market, Bloomberg News reported Thursday (March 30), citing people familiar with the matter.
The IPO could happen as soon as the end of the year, one of the people said. The report — again citing the same sources — says Cainiao is valued at upwards of $20 billion.
PYMNTS has contacted Alibaba for comment but has not yet received a reply.
The report comes two days after the news that Alibaba was dividing itself into six smaller units in the largest change in history of the 25-year-old, $250 billion company.
“The original intention and fundamental purpose of this reform is to make our organization more agile, shorten decision making links and respond faster,” CEO Daniel Zhang wrote in a letter to Alibaba workers.
Zhang will remain as the company’s chief executive but also serve as CEO of another of the new off-shoots, Cloud Intelligence Group. Five of the six groups will have their own chief executives and boards, as well as the ability to do outside fundraising and go after IPOs.
The outlier is Taobao Tmall Commerce Group, which handles Alibaba’s China commerce businesses and will stay a wholly owned part of Alibaba Group. Zhang’s letter — as reported by Reuters — did not mention job cuts, but did said the company plans to “lighten and thin” its middle- and back-office operations.
As PYMNTS argued Wednesday (March 29), Alibaba’s announcement is a sign that the tech environment in China is changing.
“Recall that just a few years ago, Chinese regulators blocked a much-anticipated IPO of Ant Group,” PYMNTS wrote. “The proposed dual listing, in Hong Kong and Shanghai, had it gone through, would have been one of the biggest listings in history.”
By conducting initial offerings, and more or less giving a green light for future capital raises, it’s likely that the government of China wants to promote innovation, and also to build up some standing within the investment community.
The moves are also happening at a time when China’s standing, particularly in the U.S., has been a bit fraught.
For example, Alibaba and Tencent have both found themselves on the U.S. government’s Notorious Markets for Counterfeiting and Piracy roster. And as reported here, ByteDance’s social media sensation TikTok is under fire, with Congress considering a ban on the app.