Alibaba’s Global Digital Commerce Group is reportedly exploring a US IPO
In March, Alibaba announced a major restructuring plan to split the company into six business units.
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The backstory: In March, Alibaba announced a major restructuring plan to split the company into six business units. Each would have its own leadership team and cover different areas, like cloud computing, e-commerce and even food deliveries. This plan could also lead to more initial public offerings (IPOs). Two of its businesses, Cainiao (Alibaba's logistics arm) and Freshippo (its grocery chain), are reportedly the first getting ready to launch IPOs.
More recently: One of the units is the Global Digital Commerce Group, and it's behind some of Alibaba's hottest overseas retailers like Lazada, AliExpress, Trendyol, Daraz and Alibaba.com. These platforms are worth billions of dollars. In fact, Morgan Stanley estimated that Alibaba's "international retail" units are worth around US$29 billion, while a CICC analyst valued it at around US$39 billion. This unit has been killing it in the e-commerce game and brought in a massive US$9.5 billion in the last fiscal year, which accounted for 7% of Alibaba's revenue.
The development: According to insiders to Bloomberg, Alibaba's Global Digital Commerce Group is considering launching an IPO in the US to expand its business to the next level. They also said the company is in talks with banks that could make it happen as soon as next year, but the idea is still in its early stages, and nothing is set in stone.
This move could be a game-changer for Alibaba because going public in the US may make it easier to win over global investors. Plus, with the ongoing tensions between China and the US, going public in the US might help it avoid some of the drama. And Alibaba's not alone in this either – other big Chinese e-commerce companies like SHEIN are also eyeing a listing in the US.
Key comments:
In a statement to Reuters, the group said, "Currently, there is no IPO plan."
“This transformation will empower all our businesses to become more agile, enhance decision-making, and enable faster responses to market changes,” said Daniel Zhang, Alibaba CEO, in a statement about Alibaba’s restructuring.
“Overall sentiment on China is low now as geopolitical tensions continue to weigh, and it may be difficult for IPO or spin-off activity to pick up momentum in such an environment,” said Marvin Chen, an analyst with Bloomberg Intelligence. “While Alibaba stock may remain volatile, downside may be limited as valuations approach single digits again.”
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