Why Alibaba Is Investing More in Its Affiliates
Alibaba now has a majority stake in Cainiao
Chinese e-commerce company Alibaba (BABA) is getting more serious about logistics. It now has a controlling stake in Cainiao Smart Logistics Network after agreeing to invest an additional 5.3 billion yuan (about $808 million), which takes Cainiao’s valuation close to $20 billion.
This increases Alibaba’s stake in the company from 47% to 51%. Cainiao is not a profitable company, but analysts think that its close ties with the e-commerce giant could eventually change its fortunes. In any case, the move suggests that Alibaba wants to increase its control over the country’s warehousing and delivery market.
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According to the Wall Street Journal, Alibaba plans to invest a whopping 100 billion yuan (around $15.1 billion) over the next five years in ramping up its global-logistics infrastructure.
Alibaba wants to expand globally
Alibaba wants to expand its e-commerce and logistics networks globally, now that it has conquered the Chinese e-commerce market. Alibaba-backed PayTM, an Indian mobile payment service company, has now entered the Indian e-commerce market via “PayTM Mall.” However, it will have to compete with Amazon.com (AMZN) and local company Flipkart, which eat up most of the e-commerce pie in India (INDA).
Alibaba’s other subsidiary companies include Koubei, which helps enable local commerce. Alibaba invested $1.1 billion in the company in January 2017. Another notable affiliate is Ant Financial, which owns Alipay. Ant Financial now has a valuation of around $60 billion and is likely to go public soon.
Alibaba invested an additional $1 billion in Lazada, a Southeast Asian online retail company, in June, increasing its stake from 51% to 83%.