Cainiao Smart Logistics Network filed to go public in
September to much fanfare. The subsidiary would have been the first of several
spinoffs from Alibaba as part of a historic six-way breakup. At the time,
Cainiao was planning to raise at least $1 billion in an initial public offering
at a valuation of up to $20 billion, IFR reported, citing people familiar with
the deal.
The aborted plan is an obvious blow to Hong Kong. IPO
volumes in the centre plunged 56% last year, to $5.9 billion and the Hang Seng
Index is one of the worst performing global benchmarks; concern over China's
economy and Beijing's tightening regulations is driving away investors. On a
call with analysts on Tuesday, Alibaba Chairman Joe Tsai blamed a "pretty
depressed" market and lack of liquidity, both now and in the foreseeable
future.
The exit Alibaba is offering to investors, including
employees, who collectively hold 36.3% of the company, is not the worst. The
implied $10 billion price tag for Cainiao, which made a net loss in the fiscal
year to March 2023, represents 0.7 times forecast 2024 sales, according to
analysts at Jefferies. That multiple is slightly higher than mainland listed
rivals like S.F. Holding but below global peers DHL, UPS and FedEx per LSEG
data.
For Temasek, GIC and the other minority owners, it's a
consolation prize. Alibaba's decision to abandon the Cainiao listing
completely, rather than delay it, suggests Chinese markets are unlikely to
recover meaningfully any time soon. Tsai essentially confirmed the company will
no longer pursue other listings, saying "It doesn't make sense for us to
grind into these capital market deals". The failed Cainiao spinoff will be
Alibaba's second, after it walked back plans to list its cloud computing arm.
Other investors will be paying attention. Globally, sluggish
M&A and IPO activity has left private equity firms stuck with more than $3
trillion of unsold investments, according to consultancy Bain. Those with large
exposure to Chinese and private markets, such as Temasek, have to choose
between exiting at much lower-than-expected valuations or holding out in hope
that markets will improve. The Cainiao deal suggests it's not a real choice at
all.
Alibaba on March 26 said its subsidiary Cainiao Smart
Logistics Network Limited has withdrawn its initial public offering application
on the Hong Kong Stock Exchange. The company also said it will offer to buy out
all of Cainiao's minority shareholders as well as employees for up to $3.75
billion.
"The overall environment for doing capital market
transactions in order to unlock value for shareholders is just not there in
this part of the world," Alibaba Group Chairman Joe Tsai said on a call
with analysts. "It doesn't make sense for us to grind into these capital
market deals."
The company had faced a mismatch in valuation expectations
with potential investors, unnamed sources familiar with the matter told
Reuters.
Alibaba owns 63.7% of Cainiao. Other investors include
Chinese billionaire Shen Guojun, Singapore's GIC, Temasek and Malaysia's
sovereign fund Khazanah Nasional, per the company's IPO prospectus.
0 comments:
Post a Comment