Alibaba has agreed to invest $807 million to take a major ownership in the Chinese logistics firm, Cainiao.
Cainiao was founded in 2013 to bring regularity in logistics, especially in e-commerce deliveries. In 2016, Cainiao raised its first outside funding of $1.54 billion from Temasek Holdings and GIC in Singapore, Malaysia’s Khazanah Nasional and China-based Primavera Capital. It valued the company at a whopping $7.7 billion.
The E-Commerce giant from China, Alibaba, says that its goal is to fulfil the customer orders from China within 24 hours and of those overseas within 72 hours. Alibaba strongly believes that Cainiao can help the company attain this feat. Also, Alibaba said that it is planning to invest around $15 billion in the next 15 years to improve its logistics network.
In June, Cainiao raised $1.24 billion from a Chinese Insurance firm, China Life to improve its delivery and storage facilities all over the country.
With today’s investment, Alibaba’s stake in the country increased from 47% to 51%. Also, it gave Cainiao a valuation of $19.9 billion. Alibaba has also invested $1.1 billion in its other affiliate company, Koubei earlier this year. Ant Financial, Alibaba’s another affiliate company has attained a valuation of $60 billion and is all set to go public soon.
There are some fierce hassles between various e-commerce companies and delivery firm over control of logistics in the country. In June, SF Holding, an eminent logistics company from China knifed their partnership with Cainiao, which provides logistics to Taobao, a shopping website owned by Alibaba. SF Holding claimed that Alibaba demanded data which was completely unrelated to its already existing partnership agreement. However, Alibaba completely denied the claims.
Cainiao, co-founded by Alibaba in 2013, has partnerships with popular departmental stores like Intime Group, conglomerate Fosun Group. It manages around 57 million deliveries every day. Jack Ma, the founder of Alibaba, has estimated that in coming years, the number will rise to 1 billion deliveries every day.