Cainiao Network, a three-year-old logistics affiliate of Alibaba Group, has completed its maiden round of fundraising, drawing contributions from heavyweight Singapore investors GIC and Temasek amongst others, the company said in an e-mailed statement on Monday.
Cainiao declined to specify the amount raised. However, Chinese financial publication Caixin earlier reported, citing unidentified sources, that the company had amassed about Rmb10 billion ($1.54 billion), valuing the logistics start-up at nearly Rmb50 billion ($7.7 billion).
The Shenzhen-based online logistics platform, which connects delivery companies, warehouses and distribution centres, also secured investments from Malaysia’s Khazanah Nasional Bhd and China’s Primavera Capital to fund its expansion.
One person at the company familiar with the matter told FinanceAsia that the fundraising result showed investors are “bullish” on the sector.
“The amount investors wanted to invest in this round was far bigger than [what] we wanted to raise. We selected only a part of [investors],” the person said.
Cainiao was set up in 2013 by a consortium of investors including Alibaba, Chinese conglomerate Fosun Group, and a few domestic delivery companies -- its goal being to consolidate the country’s fragmented logistics industry and compete with Alibaba’s smaller rival JD.com, which runs its own logistics network.
Prior to the latest equity financing round, Alibaba held a 48% stake in Cainiao.
Fast growth
Riding on the back of the internet giant’s dominance of Chinese e-commerce, Cainiao has grown quickly and aggressively, developing a presence as of March in 2,800 Chinese cities and counties as well as in 224 countries and overseas regions.
It claims to handle over 70% of the country’s express packages and run 180,000 express delivery stations, offering same-day delivery in seven cities and next-day delivery in another 90 in China.
“If e-commerce was the focus of China’s economy in the past 10 years, logistics will be the focus for the next 10,” Judy Tong, chief executive officer of Cainiao, said in the statement. She added that the company planned to tap into the latest big data (such as order trends and delivery routes) and platform management technologies to improve the efficiency of logistic services.
According to the person familiar with the matter, Cainiao will step up efforts to improve cross-border logistics and deliveries in China’s rural areas after the Series-A funding, by building and acquiring more warehouses and delivery service stations.
Cainiao has also teamed up with a number of domestic and international logistics firms such as Singapore’s SingPost (Alibaba holds a near-14.5% stake in it) and the US Postal Service for its cross-border business. According to Chinese media reports last year, it also acquired a warehouse from Amazon in eastern China where land purchases are relatively difficult.
For Singapore’s state investor Temasek, the move matches its previous interest in China’s logistics industry. In 2014, SeaTown Holdings International, a unit of Temasek, invested $250 million in Shanghai Yupei Group, one of China’s largest private warehouse companies, along with Hong Kong-based private equity firm RRJ Capital.
The Cainiao announcement comes one week after Ant Financial Services Group, Alibaba’s financial affiliate, raised $3 billion through its second round of private funding. It plans to create a credit scoring system in a bid to access the credit history of China’s 650 million internet users.
