ALIBABA Group Holding said it will spin off Cainiao Smart Logistics Network, the logistics arm of its ecommerce empire, through an initial public offering in Hong Kong.

The Hong Kong exchange confirmed that the company can proceed with its proposed Cainiao spinoff and IPO, according to a filing on Tuesday (Sep 26). Alibaba will continue to hold more than 50 per cent of the unit’s shares, and Cainiao will remain a subsidiary of the company, the filing shows.

The Cainiao IPO would be among the first of Alibaba’s units to go public after a dramatic breakup of the tech giant unveiled earlier this year. The first-time share sale could raise at least US$1 billion, and banks including Citic Securities, Citigroup and JPMorgan Chase have been working on the deal, Bloomberg News reported earlier.

Alibaba is in the midst of a historic overhaul, splitting up into six main units and transitioning to new leadership under recently appointed chief executive officer Eddie Wu. His predecessor, Daniel Zhang, stepped down as chair and CEO to focus on Alibaba’s cloud division, and then months later, relinquished those duties as well to take on a brand-new investment fund.

Alibaba co-founded Cainiao in 2013, using it as the delivery backbone for its Chinese online marketplaces. The unit followed Alibaba’s footsteps into the global ecommerce arena, handling parcels for millions of merchants and brands on platforms like AliExpress and South-east Asia’s Lazada.

Cainiao, which means rookie or amateur in Chinese, promises to deliver packages in China within 24 hours and anywhere else in the world in 72 hours, according to its website. It operates over 300 international routes partnering with more than 3,000 logistics partners. BLOOMBERG

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