Internet giant Alibaba Group announced Wednesday that it will acquire a 10.35% stake in SingPost for $249 million, enhancing the Chinese company’s push into the logistics business and new overseas markets.
The deal would make Alibaba the second largest shareholder in publicly-traded Singapore Post, known as SingPost. Singapore state investment firm Temasek Holdings Pte Ltd is SingPost’s largest shareholder with a 25% stake.
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Alibaba deal to boost global presence
The deal with SingPost would boost Alibaba’s ability to handle international shipments and facilitate customer sources for goods from outside China. The deal would also help China’s largest e-commerce company plant its flag in Southeast Asia’s burgeoning consumer markets.
The Chinese Internet giant has been trying to improve its know-how in cross-border retailing, which can be pricey and often entail long delivery times as shipments get bogged down by customs checks. The company now handles roughly 80% of all online shopping in China, which some analysts say is already the world’s largest market for e-commerce, ahead of the U.S.
Alibaba’s efforts to enhance its international presence come close on the heels of the company’s IPO announcement. In May, the Internet giant finally filed for an IPO in the United States. In its filing, the company indicated that it was anticipating an IPO of $1 billion, but that number is likely to change as the date approaches. According to a Reuters report on the company’s filing, the offering is likely to be the biggest in the history of the tech industry.
SingPost’s e-commerce expansion
In the recent past, SingPost sought to expand its e-commerce offerings to offset declining revenues in its traditional postal business. In the year ended March 31, e-commerce-related revenue accounted for about 26% of SingPost’s total turnover of S$821.1 million.
Despite its long history dating back to 1819, SingPost only began shifting from mail delivery to logistics and e-commerce in 2003. Currently, it has a presence in 12 warehouses spread across Southeast Asia, Australia, the UK and the U.S. The proposed deal with Alibaba will facilitate lowering the cost and give the firm better control over the quality of its international deliveries.