Alibaba on Tuesday announced the cancellation of the Initial public offering of its logistics unit, Cainiao, stating that it would take full responsibility and ownership of the unit.
The unexpected IPO retreat by the company, to some analysts and enthusiasts, is a result of the deteriorating Chinese market conditions.
China is currently passing through a debt and real estate crisis, including a lower product consumption rate directly affecting e-commerce brands like Alibaba.
If Alibaba continued with the IPO of its logistics unit, it would have provided the company with an injection of funds, including a key exit deal.
However, in a press release on Tuesday, the e-commerce brand stated that it withdrew the IPO and listing application for Cainiao, noting that Alibaba intends to buy up the remaining shares.
Currently, Alibaba, which owns 64% of Cainiao, is moving to purchase the 36% stake from minority investors and employees with vested equity at the price of $3.75 billion.
Launched in May 2013 by Alibaba, Cainiao provides warehousing and fulfillment services, and reverse logistics to customers of Alibaba’s Taobao and Tmall e-commerce websites, including last-mile delivery and pickup posts. Cainiao is now valued at $10.3 billion because of the buyout offer.
