E-commerce group Alibaba agreed to pay RMB5.3bn ($798m) last week in order to up its stake in China-based logistics affiliate Cainiao Smart Logistics Network from 47% to 51%, valuing the latter at approximately $20bn.
Alibaba made the investment in advance of a $15bn initiative that will involve it beefing up its global logistics capabilities and technologies over the next five years. Through this deal, Alibaba will have another seat on Cainiao’s board of directors and hold four out of the company’s seven seats.
Cainiao was originally formed in 2013 by Alibaba, which held a 48% stake at the time of its formation, together with diversified conglomerate Fosun and retail chain Intime Retail Group. Cainiao oversees an e-commerce logistics system that spans more than 120 warehouses and 180,000 express delivery stations across more than 600 Chinese cities, with the company’s big data-powered IT system linking its services to improve efficiency.
Previously, Cainiao raised $1.5bn in March 2016 in a round at $7.7bn valuation, which featured Singaporean state-owned funds Temasek Holdings and GIC, Malaysia’s Khazanah Nasional, which acts as Malaysians sovereign investment fund, and China-based investment firm Primavera Capital.
The corporate-backed deal flow in the logistics and supply chain space has remained relatively stable over the past few years, as illustrated by the GCV Analytics bar chart. There were 36 reported deals in 2015 and 33 in 2016, while there are already 30 to date this year, indicating that corporate interest in this realm may be growing.
