More details about Alibaba’s investment in Cainiao

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On September 25, in a bid to further fuel the progress of its “new retail” strategy, Alibaba announced that it intends to raise its stake in its affiliate—Cainiao Network and pledged 100 billion yuan investment in next five years to the logistics arm that had already received tens of billions yuan to expedite leading global logistics network and further lower China’s logistics cost.

Alibaba also disclosed that it will make an additional investment of 5.3 billion yuan to raise its share in Cainiao to 51% from 47%. By then, Alibaba will own four out of 7 board members in Cainiao’s board of directors as the board adds one board member.

Our reporter consulted business registration information of Cainiao Network and found that Cainiao Smart Logistics Network (Hong Kong) Limited is the only shareholder of Cainiao Network.

The reporter also learned from the Cainiao HK Corporation’s 2017 anniversary declaration downloaded from ICRIS that its only shareholder is Cainiao Smart Logistics Network (BVI) Limited with registration in the British Virgin Islands. The change of shareholder is unknown.

The declaration also revealed that Timothy Alexander Steiner is the secretary and Tong Wenhong, the CPO of Alibaba and director of Cainiao Network, is the natural person of Cainiao HK Corporation. Besides, Alibaba’s financial statement shows that the company’s legal counsel is also Timothy Alexander Steiner, yet we do not know if it’s the same person

Han Ping, a lawyer at Beijing Guojin law Firm, said, “according to traceable stock registration record, Cainiao Network is a wholly foreign-owned enterprise. In Law of the People’s Republic of China on Foreign-Capital Enterprises, the definition of enterprises with foreign capital refers to those enterprises established in China by foreign investors, exclusively with their own capital, in accordance with relevant Chinese laws. The term does not include branches set up in China by foreign enterprises and other foreign economic organizations.

Cainiao Networks’ identity as an enterprise with foreign capital dates back to the first round of financing. According to a report of Caixin Magazine, in March 2016, Cainiao announced that it had completed the first round of financing led by GIC, Temasek, Khazanah, and Primavera Capital Group. Cainiao raised over 100 million yuan, making its estimated value worth 50 billion yuan.

Before the financing, rumors that say Cainiao Network has transformed from an enterprise operating with domestic capital into one with foreign capital and registered in Cayman Islands swirled around.

In 2014, Cainiao Network has nine direct stockholders, including Beijing Guojun (1.6 billion yuan), Stater Capital (500 million yuan), ZTO Express (50 million yuan), Tmall (2.4 billion yuan), STO Express (50 million yuan), YTO Express (50 million yuan), SF Express (50 million yuan), FORCHN (25 million yuan), Yunda Express (50 million yuan). At that time, all are domestic companies, among which ZTO Express was listed in the U.S on October 27, 2016.

Registration literature of the HK company shows that Cainiao HK Corporation was founded on June 17, 2015, probably for preparing the first round of financing. In 2015, shareholders of Cainiao Network reduce to four, including Tmall (2.4 billion yuan), Stater Capital (500 million yuan), Beijing Guojun (1.6 billion yuan), Cainiao HK Corporation (182 million yuan).

Now, Cainiao Network has only one shareholder—Cainiao HK Corporation. The business registration information also reveals that the company was registered in Shenzhen, exclusively owned by the legal person of HK and Macau.

“This additional investment is supported by all the shareholders of Cainiao. STO Express, ZTO Express, YTO Express, Yunda Express, and investors who financed the last round of financing all agreed to add investment.” Alibaba told a reporter from eeo.com. Yet, Alibaba did not explain the founding of HK shareholder corporation, shareholders’ rights, and development path.

 

This article originally appeared in eeo and was translated by Pandaily.

Click here to read the original Chinese article.

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