Alibaba’s logistics arm Cainiao Network Technology is aiming to raise up to $2 billion via a listing in Hong Kong likely early next year bolstering hopes for a capital markets revival in the Asian financial hub.
According to Reuters, Cainiao’s initial public offering (IPO) plan comes after Alibaba announced in late March that it would split its business into six units and that most of them would explore capital raisings or market debuts to help fund future growth.
Cainiao, which has started work on the IPO, is looking to raise between $1 billion and $2 billion in Hong Kong, according to three sources. They declined to be named because the listing deliberations are private.
The planned IPO, the size of which has not been reported before, is likely to be launched in early 2024. The plans are not finalised yet and remain subject to changes.
Alibaba, which acts as a massive online marketplace for buyers and sellers, has in past years picked up stakes in top express delivery players to ensure reliable services for the group.
It co-founded Cainiao in 2013 with partners including department store owner Intime Group, conglomerate Fosun Group and a handful of logistic firms. Alibaba took control of Cainiao four years later and has lifted its stake to 67% from 47%.
Cainiao, which provides software and shares data with warehouses, carriers and logistics firms, reported 42 billion yuan ($6.07 billion) in revenue in the nine months ended December, up 22% year-on-year and accounting for 6% of Alibaba’s total revenue.
The logistics arm’s IPO plan is the first of the expected capital raisings for Alibaba’s spun-off units to be reported publicly as it pursues the biggest restructuring in its 24-year history.
Analysts have said that the breakup could ease scrutiny over Chinese billionaire Jack Ma’s sprawling e-commerce empire amid a regulatory crackdown on China’s tech sector.
Hong Kong has seen a slowdown in IPO activity this year amid rising geopolitical tensions between China and the United States and tighter regulatory scrutiny on Chinese companies listing overseas.
However, some analysts expect a rebound in the second half of the year as more Chinese tech firms seek secondary listings in Hong Kong after going public in New York or Shanghai.