China’s e-commerce pioneer scrapped the much-anticipated debut as the country’s economic turmoil and regulatory uncertainty soured investors on Hong Kong IPOs. Chairman Joseph Tsai described the market as “pretty depressed” and said they wouldn’t have afforded Cainiao the kind of “patient capital” it needed to pull off a global expansion. Alibaba, which owns 64% of Cainiao, now plans to buy out all remaining stock held by investors and employees for US$3.75 billion, absorbing the fast-growing entity into its broader online retail operation.
Alibaba Group Holding Ltd. called off an initial public offering for its Cainiao logistics arm in Hong Kong, shelving a US$1 billion ($1.35 billion)-plus deal in a surprise move that underscores its new approach toward rejuvenating a flagging e-commerce empire.
It’s the second time Alibaba has nixed a high-profile debut for one of its main businesses, casting more uncertainty over a restructuring that began last year and has switched tack since the abrupt departure of former Chief Executive Officer Daniel Zhang. From an initial plan of splitting the company into six standalone divisions that could independently raise capital, the objective now is to combine operations to drive the mainstay commerce arm, while selling off non-core assets such as stakes in social media platform Bilibili Inc. and EV maker Xpeng Inc.
