Alibaba calls off $1 billion IPO for Cainiao amid market slump

China’s e-commerce pioneer decided to postpone the transaction because of poor market conditions, people familiar with the matter said. It lost its taste for the deal this year as stocks waned, the people said, asking to remain anonymous discussing a private matter. Alibaba could choose to revive the IPO should markets recover, they added.

It’s the second time Alibaba has nixed a high-profile coming-out party for one of its main businesses. In 2023, the Chinese internet firm stunned the market when it called off a listing of its $11 billion cloud unit. Cainiao Smart Logistics Network Ltd., which handles a major chunk of the millions of parcels that Alibaba’s e-commerce business generates daily, was considered one of its fastest-growing enterprises. 

Last year, Alibaba also put plans to debut its Freshippo grocery chain on the back burner. Its retreat coincides with growing uncertainty in public markets as Beijing grapples with a property crisis, loss of foreign investor confidence and the resultant economic downturn. At the same time, domestically oriented businesses are struggling to grow their topline because of waning consumer confidence.

Alibaba’s Restructuring

Alibaba is still grappling with fundamental questions surrounding the once-dominant internet company — a barometer of Chinese demand. Its performance underscored a loss of market share to rivals such as PDD and ByteDance Ltd. It posted a lower-than-projected 5% rise in December quarter revenue to 260.3 billion yuan ($36.2 billion), well off the pace of previous years.

Fueling the uncertainty, the company is going through a complicated multi-way split intended to create several independent businesses and rejuvenate the national icon. The company last year outlined plans to float its Freshippo grocery chain and Cainiao logistics arm. But Chairman Joseph Tsai last month appeared to soften its stance on those plans, saying it was in no hurry to float Cainiao because challenging market conditions would prevent it from reaping fair value. 

Cainiao filed for its IPO about six months ago in September. Alibaba — which after years of frenetic investment now controls a vast portfolio of assets — is now actively looking to sell off some of those non-core holdings, he added. It’s exploring ways to offload the InTime department store chain and other retail operations, Bloomberg News has reported. 

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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

Published: 27 Mar 2024, 06:39 AM IST