Temasek Tracking - Cainaio Smart Logistics Networks

Formed : 2013

One of the largest unicorn in China and currently valued at US$20B..

It was formed by Alibaba in 2013 together with 2 investors. Jack Ma's idea was a platform that consolidates the country’s fragmented logistics sector, using big data technology to improve efficiency of parcel delivery. Cainiao used an asset-light model that eschewed expensive warehouse construction, operating in partnership with a dozen shipping companies that carry out deliveries with 2 million people across 600 cities.

Partly to overcome US regulator's questions on the consolidation of Cainiao's financials in Alibaba's books, the latter lifted its holdings from 47% to 51% in 2017. As a subsidiary, the financials will now be consolidated. But it now sinks Alibaba deeper into setting up and controlling its own infrastructure for the delivery network. It sees higher capitalisation needs and has committed another 100 billion Yuan to expand the network in the next 5 years.

Cainiao contribute 4% Alibaba's revenue, but it is still a heavy loss making delivery company.

Recently, one of the original 3 startup investors, Fosum International, has started negotiating with Alibaba to exit the company, putting the valuation at about US$20B.

Temasek and GIC bought into the startup in a 2016 fuding round. It is not known what the total investment is.

Put this on the WATCH LIST because :

Cainiao has been piling up losses. It's model has shifted from a tech-heavy platform into the regular heavy infrastructure delivery business. Alibaba is now the biggest shareholder in a company essentially providing the logistical support to it's parent, and Temasek's equity share is diminishing. No easy exit strategy.

July 2020

Return to Portfolio Compilation

If you like to see new microblogs of troubled assets as and when they are are published, please submit your email in the box on the top, right. Thank you.