(Yicai) Sept. 27 -- Chinese e-commerce giant Alibaba Group Holding is planning to spin off its logistics arm Cainiao Smart Logistics through an initial public offering on the Hong Kong Stock Exchange.

Cainiao submitted a spin-off proposal to the HKEX, Hangzhou-based Alibaba announced yesterday, adding that it will continue to hold over half of Cainiao's total equity after the listing.

The joint sponsors of the IPO will be Citigroup Global Markets Asia, Citic Securities Hong Kong, and J.P. Morgan Securities Far East, Cainiao said in a prospectus released on the Hong Kong bourse's website yesterday, without mentioning how much it plans to raise through the listing.

The IPO proceeds are expected to be used to further develop Cainiao's international and domestic logistics service capabilities, including expanding its warehouse network, hiking its automation and digitalization efforts to enhance efficiency, and upgrading premium and standard cross-border delivery services, Cainiao noted.

"The proposed spin-off should better reflect the value of Cainiao on its own merits and increase its operational and financial transparency through which investors will be able to appraise and assess its performance and potential separately and distinctly from those of Alibaba," the Hangzhou-based parent company said in a filing yesterday.

In March, Alibaba announced that it would break itself into six business groups -- Cloud Intelligence Group, Taobao Tmall Business Group, Local Services Group, Cainiao Smart Logistics, Global Digital Business Group, and Digital Media and Entertainment Group -- that will independently raise funds and go public when the time is right.

Founded in 2013 to meet Alibaba's logistics needs, Cainiao was China's third-largest e-commerce logistics firm last year, with a market share of 16.4 percent. It was also the country's No. 1 cross-border logistics provider by number of parcels.

Cainiao's revenues totaled CNY77.8 billion (USD10.7 billion), CNY66.9 billion, and CNY52.7 billion, respectively, in the fiscal years 2023, 2022, and 2021. Alibaba contributed 28.2 percent, 30.8 percent, and 29.2 percent, respectively, of the total in the three years.

In the fiscal first quarter of 2024, Cainiao reported a net profit of CNY288 million (USD39.5 million), with revenue of CNY23.2 billion. It handled 439 million international parcels and 736 domestic ones in the three months ended June 30.

Cainiao owned two e-Hubs, over 1,100 warehouses, and more than 380 distribution centers across over 200 countries and regions worldwide as of June 30. Together with AliExpress, Cainiao will launch a five-day global delivery service in the UK and four other countries, the pair announced in a separate statement yesterday.

Editor: Futura Costaglione