The rookie returned home, and Ali entered the cooling-off period of "spin-off and listing".

On March 26, Alibaba Group announced that it had decided to withdraw Cainiao's listing application and make an offer to acquire Cainiao's minority shareholders' shares and employees' attributable shares, involving an amount of US$3.75 billion. "Given the strategic importance of Cainiao to Alibaba, and the significant long-term opportunities we see in building our global logistics network, we believe it is an opportune time for Alibaba to increase its investment in Cainiao," said Joe Tsai, Chairman of Alibaba Group. ”

A view of the exterior of the rookie park

According to Alibaba's previous plan, the spin-off and listing aims to allow each business to show its market value more independently. But Alibaba has recently redefined its strategy: "focusing on e-commerce and cloud" — something Alibaba executives have repeatedly emphasized in earnings calls and public interviews. For rookies, it is obviously a more important task to be a good assistant for Taotian Group and Alibaba Digital Business Group.

Although there are rumors of sales and frequent actions to reduce holdings, Ali is "the province and the flower".

While investing heavily in AI, Alibaba has invested more in its original core business. Cainiao has made it clear that it will continue to expand its logistics network to the global market. Ali's big tree is undoubtedly the strongest supporter of this plan - in fact, Cainiao is not Alibaba's first "homecoming" business. In November last year, Alibaba announced that it would no longer promote the complete spin-off of the Cloud Intelligence Group and would continue to increase its strategic investment in Alibaba Cloud.

In the current market environment, the withdrawal of an IPO by a rookie is not necessarily a bad thing. Being able to focus on the business itself from the "future story" of the listing is even a good thing for Cainiao and other Alibaba business units.

Rookie "homecoming", Ali "heart"

From the perspective of the capital market, now may not be the best time for a rookie to spin off and go public.

Take the logistics market as an example: in May 2021, JD Logistics was listed on the Hong Kong Stock Exchange with an issue price of HK$40.63 per share, but now JD Logistics has already fallen below the issue price; in October 2023, J&T Express was listed in Hong Kong with an issue price of HK$12 per share, but as of the close of trading on March 28 this year, it was HK$10.48 per share;

Wind screenshot

Affected by the Federal Reserve's interest rate hike, the global IPO situation is not good. The Hong Kong stock market is no exception.

According to the official website of the Hong Kong Stock Exchange, as of December 29, 2023, there were 73 newly listed companies in Hong Kong in 2023, compared with 90 in the whole of 2022. The IPO proceeds of newly listed companies amounted to HK$46.295 billion, compared to HK$104.622 billion for the whole year of 2022.

On the whole, I am afraid that now is not the best window for rookies to go public.

Ali executives have mentioned several times that all IPOs depend on market conditions. The implication is that "bleeding to the market" doesn't make much sense.

Of course, there is another question: what is the latest valuation of rookies?

According to the media citing Tsai Chongxin's temporary conference call, Cainiao's latest valuation is about US$10.3 billion (about 74.4 billion yuan, HK$80.5 billion) - this figure is lower than the US$20 billion mentioned in 2023, but in some market opinions, Cainiao's latest valuation is generally reasonable. As of the close of Hong Kong stocks on March 28, the market value of J&T was 92.4 billion Hong Kong dollars, and the market value of Jingdong Logistics was 52.8 billion Hong Kong dollars.

Compared with going public, providing a strong fulcrum for other businesses is the most important mission of Cainiao now.

According to Alibaba's financial report for the third quarter of fiscal year 2024 (as of December 31, 2023), international digital business (up 44% year-on-year) and Cainiao (up 24% year-on-year) are the two fastest-growing divisions of Alibaba. In the future, the in-depth collaboration between Cainiao and the international digital business group will be what Alibaba's management and investors want to see the most.

Under the new strategy, Alibaba focuses on "e-commerce + cloud". E-commerce is the main business and market of the entire Alibaba, and how close the fulfillment and e-commerce are, how important logistics is to e-commerce. Especially for the international e-commerce business, Cainiao has invested a lot of resources in international logistics layout, which will be the "moat" for Alibaba's e-commerce business to improve service quality and even resist market competition.

Screenshot of Alibaba's financial report information

Ali international e-commerce is facing more and more extensive competition.

According to South Korean media reports on March 27, South Korean e-commerce company Coupang officially announced a new investment plan to upgrade its distribution network to improve the coverage of the "rocket delivery service". The investment is about $2.2 billion, just over double the recent investment of Alibaba, which was previously revealed to be planning to invest $1.1 billion in the South Korean market to build a logistics center. The meaning of "Coupang" is self-evident.

Screenshot of media coverage

The rookie's new mission is becoming clear.

On March 19, Cainiao and AliExpress upgraded the "Global 5-Day Delivery" and opened new markets such as the United States. In the temporary conference call of Cainiao's withdrawal of IPO, Alibaba's management further stated that it would speed up the construction of a global logistics network so that Cainiao has the ability to deliver packages from anywhere to anywhere within 72 hours (3 days). The return of rookies is conducive to achieving this goal.

It is worth mentioning that on the evening of the day of the withdrawal of the listing application, Wan Lin, CEO of Cainiao Group, sent an email to all employees, announcing the "Second Entrepreneurship Bonus Incentive Plan": in addition to the normal year-end bonus in April 2025, Cainiao regular employees will also receive an additional bonus of the same amount in August 2025. "This year is a crucial year for rookies on the road to their second venture," Wan Lin said, which requires all employees to continue to work together.

Rookies "return home", no longer need to be distracted by the IPO, perhaps this is also a kind of "burden reduction" on the road to the second entrepreneurship.

The province, the flower, Ali entered the "spin-off listing" cooling-off period

Alibaba's "most important organizational change in its 24-year history" has been exactly a full year.

On March 28, 2023, Alibaba announced the "1+6+N" organizational change. Under Alibaba Group, six business groups and a number of business companies will be established, each of which will have its own board of directors and implement the CEO responsibility system under the leadership of the board of directors of each business group and business company.

"Qualified business groups and companies will have the possibility of independent financing and listing. ”

In May 2023, Alibaba disclosed its multi-business financing and listing plan with its financial report, and Cloud Intelligence Group will be completely spun off from Alibaba Group and go public. Explore the listing of Cainiao Group, which is "expected to be completed in the next 12 to 18 months", and the implementation of the listing process of Hema "is expected to be completed in the next 6 to 12 months".

But it backfired.

In May 2023, Alibaba Cloud publicly announced that it plans to completely spin off the Cloud Intelligence Group from Alibaba Group and complete the listing in the next 12 months, forming a new company completely independent from Alibaba Group in terms of equity and corporate governance, and in November of the same year, Alibaba announced that it would not promote the complete spin-off of the Cloud Intelligence Group and "will resolutely increase its continuous strategic investment in Alibaba Cloud".

In November of the same year, Alibaba's financial report disclosed that the Hema IPO plan was put on hold, and "we are evaluating market conditions and other factors necessary to ensure the success of the project and enhance shareholder value." "Similar to Cainiao's logistics industry, the continued pressure on the fresh food and supermarket markets has also made the road to Hema an IPO difficult.

The rookie who submitted the form to the Hong Kong Stock Exchange is undoubtedly the closest to the spin-off listing.

Rookie staff

Cainiao's priority adjustment from spin-off and listing to deep collaboration is a signal: Ali is becoming more calm.

"The province, the province": In the first nine months of fiscal 2024, Alibaba completed $1.7 billion in non-core asset sales. For issues such as how to exit the shares of some listed companies, Ali has set up a special team. Recently, Ali has reduced its holdings in Kuaigou Taxi, Xpeng Motors and Bilibili.

At the same time as recovering the funds, Ali increased its external investment.

In February, Alibaba led the Dark Side of the Moon, pushing its valuation to about $2.5 billion, and in March, Alibaba led a new round of large-scale funding for MiniMax, a start-up project based on a large model of GM...... According to some statistics, "unicorns" such as the dark side of the moon, Baichuan Intelligence, MiniMax, Zhipu AI, and Zero One Everything are all in Alibaba's investment territory.

From this point of view, Ali is not trying to tighten his belt to live, but reclassifies his business according to strategic priorities: e-commerce is Alibaba's cash cow and foundation, and cloud computing and AI technology represent the future of the industry. A business that serves a new strategic goal deserves to continue to grow and receive more resources.

Exterior view of Ali's office building

After the "1+6+N" spin-off, Alibaba decided to focus on its core business, which may be the crossroads of the fate of all businesses.

Of course, it is still not time to make a final conclusion on the "spin-off and listing" strategy. However, shifting more energy from "listing" to "business", calmly thinking about what to do, and doing it well, is what Ali needs most in transition. "Ali will change, Ali will change", and it is destined not to stay on paper.