Alibaba paying $807M to increase stake in logistics firm Cainiao

Chinese e-commerce major Alibaba has agreed to invest RMB 5.3 billion ($807 million) in order to take majority ownership (51 percent) in logistics firm Cainiao. Prior to the investment, Alibaba held 47 percent in Cainiao. The deal gives Alibaba an extra seat on the board, giving it four out of the seven seats on Cainiao's board.

The additional investment will be used in research and development of Cainiao's logistics data technology, and smart warehousing and smart delivery development, among other things, the company said. Alibaba said it plans to invest over $15 billion in the next five years to develop its global logistics network after becoming the majority stakeholder in its affiliate logistics arm Cainiao network. The goal is to enable e-commerce services in China to fulfill customer orders within 24 hours and for overseas within 72 hours.

Alibaba CEO Daniel Zhang said: "By enhancing the logistics capabilities within the Alibaba ecosystem and extending our investment in this sector, we are further enabling our new retail strategy to bring online and offline retail into one seamless experience for shoppers."

The investment by Alibaba gives Cainiao a valuation of RMB 132.5 ($19.9 billion). The deal is expected to be completed in next month. Credit Suisse acted as the financial advisor to Alibaba and Morgan Stanley acted as the financial advisor to Cainiao.