Alibaba Group Holding Ltd. has scrapped plans for the initial public offering (IPO) of its Cainiao logistics arm in Hong Kong, putting a halt to a deal worth over $1 billion in a surprising move that reflects its new strategy for revitalizing its e-commerce empire.
This decision marks the second time Alibaba has canceled a high-profile debut for one of its major businesses, adding further uncertainty to its restructuring efforts initiated last year.
However, the strategy has shifted since the sudden departure of former CEO Daniel Zhang. The current focus is on consolidating operations to strengthen the core commerce arm while divesting non-core assets like stakes in Bilibili Inc. and Xpeng Inc.
Chairman Joseph Tsai described the market as “pretty depressed,” emphasizing that it wouldn’t have provided Cainiao with the patient capital necessary for global expansion.
With Alibaba owning 64% of Cainiao, the new plan involves buying out all remaining stock held by investors and employees for $3.75 billion, integrating the fast-growing entity into its broader online retail business.
The decision reflects Alibaba’s prioritization of reinvesting in the expansion of its business, particularly Cainiao, which has consistently outperformed other divisions in recent quarters due to its international presence.
Tsai explained to analysts that, given the challenging IPO market conditions, it became evident that taking Cainiao public in the current environment would not align with the group’s strategy.
Alibaba continues to grapple with fundamental questions about its future trajectory, having lost market share to competitors like PDD Holdings Inc. and ByteDance Ltd.
Its revenue growth in the December quarter fell below expectations, signaling a significant slowdown compared to previous years.
