Alibaba's Cainiao Smart Logistics Network Files for Hong Kong IPO: What Investors Need to Know

Alibaba Group Holding Limited BABA logistics arm Cainiao Smart Logistics Network Ltd filed for its Hong Kong initial public offering.

The first-time share sale could raise a minimum of $1 billion, Bloomberg cites knowledgeable sources.

Citic Securities Co, Citigroup Inc C, and JPMorgan Chase & Co JPM are joint sponsors of the offering.

The Hong Kong exchange confirmed that the company could proceed with its proposed Cainiao spinoff and IPO.

Alibaba looks to retain over 50% of the unit's shares and keep Cainiao as a subsidiary.

Due to weak sentiment, Alibaba is putting the Hong Kong IPO of its Freshippo grocery chain on the back burner.

Alibaba is amid an organizational restructuring, splitting into six central units and transitioning to new leadership under recently appointed CEO Eddie Wu.

Alibaba co-founded Cainiao in 2013, using it as the delivery backbone for its Chinese online marketplaces.

Cainiao promises to deliver packages in China within 24 hours and anywhere else worldwide in 72 hours.

The company now considers international express delivery a significant driver for growth.

Cainiao Smart Logistics Network Limited's revenue increased 34% Y/Y to $3.19 billion in Q1.

Revenue from Alibaba accounted for 30% of Cainiao sales over the past three fiscal years.

Price Action: BABA shares traded lower by 1.46% at $85.95 on the last check Tuesday.