Alibaba to List Cloud and AI Business Following Spinoff and Seek IPOs for Freshippo and Cainiao

BEIJING, May 18 (TiPost)— Alibaba Group Holding Limited kicked off a series of capital raisings for various business and turn some of them into listed companies, including a fully independent one. The announcement marks an effort for breakup following the largest ever reorganization in its 24-year history.

Source: Visual China

Alibaba’s board of directors approved a full spin-off of the Cloud Intelligence Group via a stock dividend distribution to shareholders, aiming to complete the breakup in the next 12 months and make the group an independent publicly listed firm. The board also approved Alibaba Group’s chairman and CEO Daniel Zhang, also known as Zhang Yong, to serve as chairman and CEO of the Cloud Intelligence Group, including cloud, artificial intelligence (AI), DingTalk and other businesses. The Chinese internet giant plans to include external strategic investors in the cloud business group through private financings prior to the spinoff. The spinoff is subject to restructuring of certain assets, liabilities and contracts, implementation of employee equity incentive plans, market conditions, as well as regulatory reviews and approvals in relevant jurisdictions.

Listing plans about two other business groups also got the nod from Alibaba’s board. Freshippo (Heman), a grocery stores operator under the China commerce segment, is approved to execute an initial public offering (IPO), and expected to be completed in the next 6 to 12 months. Cainiao Smart Logistics, a group provides supply chain, logistics and delivery services that Alibaba holds a 67% stakes in, is approved to explore an IPO with the target to complete the deal in the next 12 to 18 months. Joseph Tsai, the executive vice chairman of Alibaba Group, was approved to take the position of Cainiao’s chairman, leading the company with Lin Wan as its CEO.

Alibaba board gave green light to exploration of external capital raising for Alibaba International Digital Commerce Group, including Lazada, AliExpress, Trendyol, Daraz, Alibaba.com and other businesses. J. Michael Evans, the director and president of Alibaba Group, and Fan Jiang were approved to act as chairman and CEO of the business group respectively.

The spinoff is made for better development and can be deemed as a new start for Alibaba Cloud’s second venture in the future, Daniel Zhang noted in his letter to employees on Thursday. “In the fututher, the Cloud Intelligence Group can face the market more independently, further strengthen its business strategy, and optimize its organization and operations,” Zhang wrote.”This requires us to have more entrepreneur mindset, take more responsibilities, and better balance the relationship between short-term growth anxiety and long-term development goals, thus providing us the opportunity to jointly build a world-class technology company. ”   

Alibaba announced in late March to split into six business groups, including Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, Digital Media and Entertainment Group. Five of these major business groups will have the flexibility to raise external capital and potentially to seek its own IPO, with the exception of Taobao & Tmall Group, which will remain wholly-owned by Alibaba Group. Daniel Zhang called the move “the most significant governance overhaul” since Alibaba’s inception and said each business group is fully responsible for its performance, with financial independence.

Soon after the overhaul unveiled, Bloomberg reported the logistic arm Cainiao has started preparation for its Hong Kong IPO, which seems to be the first in Alibaba’s six units to be a listed company. With the current valuation at more than US$20 billion, Cainiao could go public as early as end of the year, the report cited people with knowledge of the matter. Another report last month said Freshippo, with the market value arbout US$242 billion, is mulling an IPO in Hong Kong, without details like the planned fundraising size or the company’s valuation.

Alibaba logged revenue of RMB208.2 billion with a year-over-year (YoY) increase of 2% in the quarter ended March 31, the slowest growth since it went public in 2014, missing the annalists’ estimate of RMB209.19 billion (US$30.12 billion), according to the financial results released on Thursday. Revenue from the cloud segment fell 2% YoY to RMB18.582 billion, the first ever quarterly decline on record.

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