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Transport and logistics

Alibaba pledges 100bn yuan investment after becoming controlling shareholder of Cainiao Network

PUBLISHED : Tuesday, 26 September, 2017, 4:01pm
UPDATED : Tuesday, 26 September, 2017, 11:00pm

Alibaba Group, the largest e-commerce platform in China, is planning to invest 100 billion yuan (US$15 billion) to strengthen its global logistics network over the next five years after becoming the controlling stakeholder in its affiliate logistics arm Cainiao Network.

Alibaba will make an additional investment of 5.3 billion yuan to raise its stake in Cainiao to 51 per cent from 47 per cent, the company said in an email statement on Tuesday.

Upon completion of the transaction, Alibaba will become the controlling shareholder in Cainiao after gaining one additional new seat on the board of directors, with its board representation reaching four out of the total seven seats.

Cainiao was founded in May 2013 by Alibaba in partnership with a consortium of companies including Intime, Fosun, Forchn as well as four Chinese express couriers – STO Express, YTO Express, ZTO Express and Yunda Express. Alibaba owns the South China Morning Post.

In March 2016, Cainiao confirmed its maiden external funding round from Singapore’s Temasek and GIC, Malaysia’s Khazanah Nasional, and China’s Primavera Capital, without disclosing the amount of the funds or its valuation.

Alibaba did not elaborate on the division of shares among the other investors or reveal who holds the remaining three board seats after its latest fund injection.

In a bid to further fuel the progress of its “new retail” initiative, Alibaba said in the statement that it intends to invest 100 billion yuan over five years to achieve its mission of fulfilling orders in China within 24 hours and within 72 hours anywhere in the world.

In July Alibaba set up a committee led by its chief executive Daniel Zhang Yong to better execute its new retail strategy – a concept which aims to integrate online, offline, logistics and data across a single value chain powered by big data and artificial intelligence technologies, reshaping the global retail landscape.

Alibaba said its further investments in Cainiao are expected to “enhance the overall logistics experience for consumers and merchants across the Alibaba ecosystem, as well as enable greater efficiencies and lower costs in China’s logistics sector”.

Alibaba Singles’ Day shopping frenzy exceeds US$16.8b to break record

For the upcoming Singles’ Day shopping spree on November 11, Cainiao announced last week that it was offering 1.5 billion yuan to its Chinese merchandisers and logistics partners so they can build more warehouses and improve delivery efficiency. This year’s event is expected to generate a one billion deliveries between November 11 and 16.