Cainiao withdrew its listing for 30 days: Ali's 10 billion repurchase was opened, taking over the shares held by Shentong

Times Finance

2024-04-27 07:47Posted on the official account of Guangdong Times Finance

Source of this article: Times Finance Author: Lin Xinlin

A month after the suspension of Cainiao's IPO, Alibaba launched a 27 billion yuan buyback program.

Image source: Photo by Times Finance

According to the previously announced plan, Alibaba will make an offer to acquire all the shares of Cainiao's minority shareholders and employees' attributable shares at a price of US$0.62 per share, for a total consideration of US$3.75 billion, equivalent to about 27 billion yuan, with Cainiao's minority shareholders and employees having the option to sell or continue to hold Cainiao's shares.

The first shareholder to publicly choose to sell his stake appeared. On April 24, Shentong Express announced that Cainiao planned to sell its equity, involving 70.738 million US dollars, equivalent to about 513 million yuan.

With the implementation of the buyback plan one after another, those who once bet on the rookie to "get rich" may fall back to reality one by one.

It is planned to empty the equity of rookie, and Shentong has participated in multiple rounds of investment

According to the announcement of Shentong Express, STO Express Investment Holding Pte. Ltd. ("Singapore Shentong") intends to transfer its 114,094,165 ordinary shares held by Cainiao to Ali CN Investment Holding Limited, a holding company, at a price of US$0.62 per share, at a price of approximately US$70.738 million, and at the same time intend to waive its right of first refusal.

According to the agreement, the transferee Ali CN will pay 90% of the equity transfer consideration to the transferor, i.e., US$63.66 million, on the closing date. After the completion of the transaction, Singapore Shentong will no longer hold an equity interest in Cainiao, which was 0.74% before the transaction.

Shentong Express said that in view of Alibaba's withdrawal of Cainiao's listing application and its offer to acquire the equity of Cainiao's minority shareholders, the company, as a shareholder of Cainiao, agreed to implement this transaction in order to improve its own asset management efficiency, optimize its asset structure, and achieve a smooth exit from foreign investment projects.

However, the transaction announcement did not disclose the investment income from the share transfer. Times Finance inquired about Shentong Express, but has not received a relevant response as of press time.

According to the rookie prospectus reviewed by Times Finance, since the establishment of the rookie, Shentong has participated in a total of three investments.

In 2015, Alibaba, together with Yintai Group, Fosun Group, Fuchun Holdings, and Santong Yida Express Co., Ltd., jointly established Cainiao, and according to the Industrial Securities report, several express companies each invested 50 million yuan, accounting for 1% of the shares. The prospectus also shows that in 2015, Shentong Express was allotted 90 million shares, holding 1.01% of the shares.

Since then, Cainiao has carried out three rounds of financing in 2016, 2017 and 2019, raising a total of 31 billion yuan. Among them, Singapore Shentong participated in the last two rounds of financing, subscribing for part of 9 million shares and 15.0942 million shares respectively, with a capital contribution consideration of 45 million yuan and 112.5 million yuan. Together with the investment in 2015, the total of the three trips is 207.5 million yuan.

It is worth noting that the prospectus shows that in the two rounds of financing in 2017 and 2019, the cost per share paid by investors was 5 yuan and 7.45 yuan respectively, while Ali's repurchase price of Cainiao's shares was only 0.62 US dollars (equivalent to 4.49 yuan). Judging from the last round of financing, the book value of this part of Singapore Shentong is only 67.77 million yuan, which is about 40% compared with the consideration of 112.5 million yuan at the time of investment.

However, due to the advantages of the initial investors, compared with the total consideration of 513 million yuan for the Ali repurchase, Shentong Express still recorded a profit on the overall book.

Shentong Express has always been the express delivery company with the deepest tie to Ali.

As early as 2019, Alibaba signed a share option agreement with Shentong Express for 4.7 billion yuan, and then launched business and capital cooperation. In May last year, Cainiao officially launched the listing process, and then Alibaba's company transferred 383 million shares of Shentong Express to Cainiao's Zhejiang Cainiao Supply Chain, and after the transfer was completed, Cainiao held 25% of Shentong Express's shares, which is the largest shareholder with the highest single shareholding ratio.

Shentong is also the only express delivery company in which Cainiao directly invests and holds shares. The cooperation between the two parties has been relatively close, including the joint launch of the smart warehouse allocation next-day delivery service, the use of Shentong's trunk transshipment infrastructure to support the Cainiao smart warehouse speed up service, the establishment of a logistics equity investment fund, investment and revitalization of Cainiao's warehousing and logistics facilities, etc.

In December last year, Shentong Express also announced that according to the needs of business development, it plans to increase the annual related party transactions with Cainiao's subsidiaries by 300 million yuan, and it is expected that the company will generate daily related party transactions with Cainiao, Taotian Supply Chain and Alibaba Group by 5.29 billion yuan in 2024.

Valuations fell, and more than 10,000 employees were "bundled" with equity incentive plans

Alibaba's buyback price also exposed the shrinkage of Cainiao's valuation from its peak.

According to Xinhua News Agency, on November 8, 2019, Alibaba invested 23.3 billion yuan to strategically increase its stake in Cainiao Network, increasing its stake in Cainiao from about 51% to about 63%. According to the consideration for the increase in holdings and shares, the valuation of rookies reached 194.2 billion yuan at that time, approaching 200 billion yuan.

In May last year, the global unicorn list released by the Hurun Research Institute showed that rookies ranked among the top ten with a valuation of 185 billion yuan, far exceeding the 105 billion yuan of J&T and the 90 billion yuan valuation of Hulala at that time. At that time, Cainiao was starting its journey to go public, and Alibaba, which was in the midst of change, said that a separate listing could better reflect the value of Cainiao as an important business of the group.

However, if calculated according to the shareholding ratio of Shentong Express and the repurchase price, Cainiao's current valuation is about 9.56 billion US dollars, equivalent to about 69.2 billion yuan. According to this calculation, the valuation of today's rookies has fallen a lot from the peak.

Although Alibaba launched a buyback program of about 27 billion yuan after the withdrawal of the Cainiao IPO to alleviate the uncertainty that minority shareholders need to face, the decline in valuations means a reduction in the wealth effect for those who hold equity and options.

Equity incentive is a common incentive method used by major Internet companies. Cainiao mentioned in the prospectus that on December 30, 2015, the company's board of directors approved the establishment of the 2015 equity incentive plan, which is an equity-settled share incentive plan designed to attract and retain employees and directors, and the plan is valid for 10 years, and then re-approved a revised version in 2018.

Huang Li, a rookie employee who left in March this year, told Times Finance that the salary of rookie employees is basically based on annual packages, and the so-called stock options are part of the salary system.

According to the prospectus, Cainiao's equity incentive plan granted outstanding share options to 10,774 grantees to subscribe for a total of 1.922 billion shares, accounting for about 12.5% of the share capital of 15.373 billion. The grantees include 2 directors, 1 member of senior management, 4 other related persons of the Company, and 10,767 Cainiao, other employees and consultants of Alibaba Group and its affiliates.

Generally speaking, the option grant of large companies such as Alibaba is linked to performance, and after the option is granted, it must go through vesting, exercise, and finally the company's listing or M&A node before it can be cashed. Before going public, the company will also repurchase employee options under certain circumstances to realize employee options in advance. In anticipation of the rising value of the options in their hands, many employees of large factories like Huang Li have the mentality of "wanting to leave but not willing".

The announcement of the withdrawal of the rookie from the listing in March made Huang Li sigh that "the former illusions have been shattered". Huang Li said that in 2019, the repurchase price of internal options was about 2 US dollars, equivalent to about 14 yuan, and now the repurchase price of 0.6 US dollars is equivalent to a two-thirds reduction, which has disappointed many people.

Huang Li also mentioned that the lowest exercise price in the early days was less than $0.1, but according to the exercise window of the past year or two, the exercise price of employees is about $0.56 per share, which means that if it is sold now, there is basically not much profit increase.

According to the information previously provided by Cainiao, the Cainiao employee equity purchase plan will be implemented in August 2024, and employees can voluntarily sell all Cainiao shares vested on or before August 1, 2024.

"The company does not force buybacks, and now that the price has fallen so hard, it can only continue to hold. Another rookie employee also revealed that the internal repurchase price in 2021 was about $2.15, but the previous rule was that he could only realize his equity if he left his job, so he was reluctant to sell it in anticipation that the company would go public. Li Chong, a rookie employee, said that when he left last year, the company responded that there was no clear process for listing, so he had been holding it, and now he plans to cash out all the options when he buys back in August this year.

Or in order to stabilize the morale of rookie employees, at the same time as the official announcement of the withdrawal plan on March 26, Wan Lin, CEO of Cainiao Group, sent an email to all employees, announcing that a second entrepreneurship bonus incentive plan will be launched for rookie employees, and rookie regular employees will receive an additional bonus of the same amount in August 2025 in addition to the normal year-end bonus in April 2025.

However, with the cold market environment in recent years, the market value and valuation of Internet companies have shrunk, and Li Chong has long expected in his heart, "Now there are not so many stories of options making wealth on the Internet." ”

(The above interviewees have changed their names)

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