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Fosun looks to reap the gains of its early investment in logistics giant Cainiao with a US$1.3 billion stake sale to Alibaba

  • The Chinese conglomerate plans to sell its Cainiao stake to Alibaba and other investors
  • E-commerce giant Alibaba is upgrading its logistics network globally

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Employees and visitors stand at the Cainiao display at Alibaba's headquarters in Hangzhou. Photo: Bloomberg
Alison Tudor-Ackroyd

Fosun International, one of China’s biggest private sector conglomerates, is set to sell its 6.7 per cent stake in logistics firm Cainiao to Alibaba Group Holding and other investors for around US$1.3 billion, according to a person familiar with the matter.

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Shanghai-based Fosun, which owns the ClubMed resorts, the French fashion brand Lanvin and the Canadian troupe Cirque do Soleil among other assets, was an early investor in Cainiao with a 500 million yuan (US$70 million) investment in 2013. The conglomerate is keen to lock in a profit, and plans to reinvest the capital into the health care and consumer industries, said the person familiar with Fosun’s plans, declining to be named.

A deal is likely to be struck at a valuation for Cainiao of around US$20 billion, which may be below the market-clearing level for the logistics company but still rewards Fosun with a handsome return on its investment, the person familiar said.

For its part, Alibaba is keen to draw Cainiao - a Chinese colloquialism for a “rookie” - deeper into its ecosystem as it seeks to upgrade its delivery capability. The coronavirus pandemic has underscored to the e-commerce giant how vital a reliable logistics network is to business continuity and ensuring customer satisfaction, particularly in far-flung parts of the world with patchy infrastructure.
A Cainiao robotic arm puts boxes on sorting robots. Photo: Zen Soo
A Cainiao robotic arm puts boxes on sorting robots. Photo: Zen Soo
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In November, Alibaba invested an additional 23.3 billion yuan to increase its stake in Cainiao to around 63 per cent from about 51 per cent. Alibaba owns South China Morning Post.
Cainiao announced on Tuesday a three-year initiative to ramp up efficiency so it can deliver packages within 24 hours in China and 72 hours globally. The affiliate of Asia’s largest e-commerce platform said the company will invest at least 1 billion yuan in its logistic network to increase chartered flights, build warehouse facilities and expand partnerships with customs authorities around the world.
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