Alibaba Boosts Stake In Cainiao With $3.33B Investment

Two years after acquiring a majority stake in the firm, Alibaba plans an additional investment of roughly $3.33 billion in logistics affiliate Cainiao to increase its equity stake from 51 percent to 63 percent. The company would subscribe Cainiao shares that are newly issued and also buy equity interest from a shareholder in the company who was not named, according to reports.

Conglomerate Fosun Group, department store owner Intime Group and other logistic companies also have Cainiao stakes. Alibaba had increased its stake from 47 percent to 51 percent in 2017 and committed to spend over 100 billion yuan to grow the logistics business over five years.

Alibaba co-founded Cainiao in 2013 to bring organization to Chinese logistics, especially when it comes to online shopping deliveries. As it stands, the company is said to power a large volume of the logistics needs of Alibaba in the nation. The affiliate reported revenue of $680m in the quarter that concluded in September.

It matches deliveries, riders and warehouses, which is behind the logistics side of eCommerce platforms such as Tmall and Taobao in the same way that Alipay functions for the payments side per analysts. Reports noted that Alibaba said last year that logistics and express delivery are pivotal for eCommerce companies.

In separate news, Alibaba Group’s logistics operator is partnering with Aviastar-Tu and Pochta Russia to roll out direct China-Russia cargo delivery flights. Alibaba’s Cainiao logistics operator is leasing seven cargo planes to fly every day from China to Moscow, Krasnoyarsk and Yekaterinburg.

AliExpress Russia is hoping the partnership will cut delivery times for Russians who purchase AliExpress eCommerce items. Russia’s online shopping sales are over $14 billion each year and growing. The direct flight is intended to deliver orders from China to Russia in 10 days.

In June, Russian eCommerce giant Mail.ru, mobile company MegaFon and Alibaba announced a partnership to form AliExpress Russia Joint Venture. The new operation caters to Russia as well as surrounding countries of the Commonwealth of Independent States (CIS).