Alibaba to Spin Off Cloud, Logistics, and Grocery Businesses for IPO
Dou Shicong
DATE:  May 19 2023
/ SOURCE:  Yicai
Alibaba to Spin Off Cloud, Logistics, and Grocery Businesses for IPO Alibaba to Spin Off Cloud, Logistics, and Grocery Businesses for IPO

(Yicai Global) May 19 -- One and a half months after Alibaba Group Holding split itself into six businesses, the Chinese e-commerce giant announced that it will spin off its cloud, logistics, and grocery arms in preparation for separate listings.

Alibaba expects its Cloud Intelligence Group to list within 12 months, the Hangzhou-based firm said in its quarterly earnings report yesterday, adding that it will seek external financing for the group from new strategic investors.

“We are taking concrete steps towards unlocking value from our businesses,” Alibaba’s Chairman and Chief Executive Daniel Zhang said in statement yesterday.

On March 28, Alibaba unveiled a split into six business groups -- Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, International Digital Commerce Group, and Digital Media and Entertainment Group -- and said each will independently raise funds and go public when the time is right.

“Cloud Intelligence's business model, customer profile and stage of development are fundamentally different from the other consumer-focused businesses in the Alibaba ecosystem," Zhang said. “Full independence will allow Cloud Intelligence to further sharpen its business strategy and optimize its operations and organization.”

Alibaba also said it expects its logistics arm Cainiao and Hema Fresh, the grocery and fresh foods chain under Taobao Tmall Commerce and also known as Freshippo, to complete initial public offerings in the next 12 to 18 months and six to 12 months, respectively.

“Freshippo and Cainiao have over the years established differentiated customer value propositions, stable and well-defined business models and a clear path to profitability," Zhang added. "We believe these two companies are ready to go public."

Alibaba's International Digital Commerce, which operates Southeast Asian e-commerce site Lazada and cross-border marketplace AliExpress, will explore tapping external capital to support its development and growth in the global market, Zhang noted.

In the first quarter, Alibaba posted a net profit of CNY23.5 billion (USD3.4 billion), versus a net loss of CNY16.2 billion in the same period last year, mainly due to net gains arising from the increase in the share prices of publicly traded companies it has invested in.

Alibaba's revenue rose 2 percent to CNY208.2 billion (USD30.3 billion) in the three months ended March 31 from a year earlier, with the cloud services business down 2 percent to CNY18.6 billion. Cainiao's revenue jumped 18 percent to CNY13.6 billion.

The age of artificial intelligence brings historic opportunities to Alibaba Cloud, said Zhang, who is also the chairman and CEO of Cloud Intelligence.

In April, Alibaba released a large-language pre-training model called Tongyi Qianwen.

"More than 200,000 customers have applied for trial access, and we have started to work with several industry partners to develop vertical models based on Tongyi Qianwen," Zhang said. “We also plan to launch cloud products and enterprise solutions based on the Tongyi model.”

Editor: Futura Costaglione

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Keywords:   Alibaba,Alicloud,Cainiao,Freshippo,IPO