SINGAPORE - Chinese e-commerce giant Alibaba Group Holding Ltd is investing about $279 million to expand its holdings in Singapore Post Ltd (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 on Wednesday.
Mainboard-listed SingPost is growing its e-commerce business and last year an Alibaba unit bought an over 10 per cent stake in SingPost for $249 million.
In the latest deal, Alibaba said it was buying an additional 5 per cent stake in SingPost for $187.1 million.
Alibaba is currently the second largest shareholder in SingPost after Singapore Telecommunications.
On completion, Alibaba's deemed interest on a fully diluted basis in SingPost will rise to 14.51 per cent from 10.23 per cent. The acquisition is subject to Info-Communications Development Authority of Singapore (IDA) and SingPost's shareholder approvals.
Alibaba will also invest up to $92 million to buy a 34 per cent stake in Quantium Solutions International, 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 ecommerce logistics infrastructure and services," SingPost said, adding that QSI will encompass ecommerce warehousing, last mile delivery and other end-to-end ecommerce solutions.
Said SingPost CEO Dr Wolfgang Baier: "We are now taking the next step by building a regional ecommerce logistics platform and infrastructure for ecommerce players across Asia Pacific based on Quantium Solutions - our ecommerce 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 further improve efficiency and integration of ecommerce 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 steadily.
"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. 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. On behalf of my fellow directors, I welcome Alibaba as one of our partners on the next phase of the journey."
Alibaba Group CEO Mr Daniel Zhang said the additional investment into SingPost and establishment of a joint venture signify the commitment in expanding the global logistics footprint, which will help Chinese businesses sell, and global brands deliver more easily around the world.
SingPost shares were up 1.5 cents, or 0.79 per cent, at $1.905 at about 9:30am, after the announcement.