SINGAPRE (BLOOMBERG) - Singapore Post shares jumped the most in more than two years on Friday (Oct 28) after Alibaba Group Holding's stake increase in the postal delivery company gained Singapore regulatory approval.

The stock surged as much as 6.9 per cent to S$1.625, the biggest increase since May 2014, and traded at S$1.595 as of 12:10pm.

Alibaba, China's largest e-commerce company and the second-biggest investor in SingPost, will raise its stake to 14.4 per cent from 10.2 per cent with a further investment of S$187.1 million. The transaction is expected to close by February, SingPost said in a statement on Thursday.

Alibaba also completed an investment of S$86.2 million in SingPost's logistics unit Quantium Solutions International Pte, the SingPost said, adding that the two partners are "confident in the long-term value of collaborating."

"This is a positive development for SingPost, as one of the uncertainties for the stock is now put to rest," Low Pei Han, an analyst at OCBC Investment Research, wrote in a report on Friday. "Looking ahead, the group's dividend policy is likely to be revised downwards, but more importantly time is still needed for integration and synergies for substantial earnings growth following the group's earlier acquisitions."

The tie-up may help boost SingPost's delivery volumes. Alibaba expects to surpass the record US$14.3 billion in sales it made on Singles' Day in 2015 by rolling out new activities like virtual fashion shows and augmented reality games to entice shoppers. The event, which starts in two weeks, will feature celebrities including Katy Perry, who serves as Alibaba's "global ambassador."

The Singles Day promotions may lead to higher international volumes for SingPost, UOB-Kay Hian analysts including Thai Wei Ying and Andrew Chow wrote in a note Friday.