Alibaba takes bigger stake in SingPost

People at a Singapore Post branch.
People at a Singapore Post branch. PHOTO: ST FILE

Chinese e-commerce giant Alibaba Group is investing about $279 million to expand its holdings in Singapore Post (SingPost) and take a share of its subsidiary, aimed at boosting growth in their e-commerce logistics platform across the Asia-Pacific, the two companies announced yesterday.

Mainboard-listed SingPost is growing its e-commerce business, and last year an Alibaba unit bought a more than 10 per cent stake in SingPost for $249 million.

In the latest deal, Alibaba said it was buying an additional 5 per cent stake for $187.1 million. Alibaba is the second-largest shareholder in SingPost, after Singtel.

On completion, Alibaba's deemed interest in SingPost will rise to 14.51 per cent from 10.23 per cent.

The acquisition is subject to approval by the Infocomm Development Authority of Singapore and SingPost shareholders.

Alibaba will also invest up to $92 million to buy a 34 per cent stake in Quantium Solutions International (QSI), a SingPost subsidiary that provides e-commerce logistics and fulfilment services across the Asia-Pacific. SingPost will hold the remaining 66 per cent interest.

"QSI will reorganise its business and become the joint-venture vehicle of SingPost and Alibaba Group. This will allow QSI to ramp up its development of e-commerce logistics infrastructure and services," SingPost said, adding that QSI will encompass e-commerce warehousing, last-mile delivery and other end-to-end e-commerce solutions.

Said SingPost CEO Wolfgang Baier: "We are now taking the next step by building a regional e-commerce logistics platform and infrastructure for e-commerce players across Asia-Pacific based on Quantium Solutions - our e-commerce logistics subsidiary. Alibaba started as our customer and then last year became our shareholder and business partner."

SingPost and Alibaba have also entered into a joint strategic business development framework to improve efficiency and integration of e-commerce logistics solutions. A joint steering committee will be created and drawn from their respective executives.

Mr Lim Ho Kee, SingPost's chairman, said the pace of transformation at SingPost has been accelerating. "As a postal service provider, we are on a burning platform, facing a global decline in mail revenue with trends like e-substitution and lifestyle changes," he said.

"It is a win-win situation for both of us because we share similar goals and have a natural fit between our operations across Asia."

Alibaba chief executive Daniel Zhang said that the additional investment in SingPost and the new joint venture signify the commitment to expanding the global logistics footprint, which will help Chinese businesses to sell and global brands to deliver more easily around the world.

A version of this article appeared in the print edition of The Straits Times on July 09, 2015, with the headline 'Alibaba takes bigger stake in SingPost'. Print Edition | Subscribe