(Bloomberg) — Hong Kong-based Cainiao Network Technology Co., the logistics arm of Alibaba Group Holding Ltd., plans to file for an initial public offering as soon as next week, according to people familiar with the matter. The first division of a Chinese technology company has gone public.
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The company is targeting to raise at least $1 billion in the stock sale, but has yet to decide on a valuation, the people said, speaking on condition of anonymity. No final decision has been made and details could still change, the people said.
A representative for Cainiao declined to comment, while an Alibaba representative returned a Bloomberg News inquiry to Cainiao.
Alibaba shares extended gains in Hong Kong on Friday after the Bloomberg news report. The stock rose as much as 3.3 percent in its biggest intraday entry in three weeks.
The app could see Cainiao pulled from other Alibaba units into separate listings, following its parent’s surprise announcement in March that it would split its business. The logistics department is from Citigroup Inc. and JPMorgan Chase & Co. Garr has been working on an IPO, Bloomberg News reported earlier this year. China International Capital Corp. has pulled out next week due to conflicts of interest in serving as joint sponsor of J&T Global Express Ltd., which is seeking a Hong Kong listing, people familiar with the matter said.
Separately, Alibaba is putting its Hong Kong IPO on the back burner for grocery chain Freshpo amid weak sentiment for consumer stocks in China. Bloomberg News reported earlier this month that Alibaba’s capital management committee, which is overseeing the breakup of the sprawling company, recently decided to wait for a more favorable market before proceeding with an IPO and prioritize listing other units.
Alibaba founded Cainiao in 2013 to serve as the delivery backbone for China’s then-burgeoning online marketplace. The Chinese tech giant later took over the business. The unit has followed Alibaba’s footsteps into the global e-commerce platform, carrying packages for millions of merchants and brands on platforms such as AliExpress and Southeast Asia’s Lazada.
Cainiao, which means beginner or amateur in Chinese, promises to deliver packages within 24 hours in China and 72 hours anywhere in the world, according to its website. It operates more than 300 international routes in cooperation with more than 3000 logistics partners.
–With the help of Ziping Huang.
(In the fourth paragraph, the movement of Alibaba shares and about Cainiao will be added in the seventh paragraph.)
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