The deal, calls for Alibaba Group to buy an additional 5% of SingPost shares for USD 138.6 million, increasing its ownership position in the mail and parcel carrier to 14.51%. Alibaba will also invest USD 67.85 million in SingPost’s Quantium Solutions International (QSI), which runs a logistics and fulfilment network in more than 10 Asia Pacific countries.
Cross-border online shopping will see 27% CAGR growth by 2020, double the rate of worldwide B2C shopping as a whole, according to a recent report from Accenture and AliResearch, Alibaba’s research arm. While Alibaba Group currently makes less than 5% of its revenue outside of China, Jack Ma, the company’s executive chairman, said his goal is for overseas ecommerce to eventually make up half of company revenue.
Alibaba and SingPost began collaborating in 2014, when Alibaba, through an investment vehicle, acquired an initial stake in SingPost. The deal deepens their relationship, the companies said, with Alibaba taking a 34% stake in QSI, while SingPost will hold 66%.
Under the agreement, QSI, which offers ecommerce logistics and warehousing across Asia Pacific, will be reorganised as a joint venture between SingPost and Alibaba Group. In addition, QSI will also become a platform for both parties to increase collaboration, with QSI providing ecommerce warehousing, last-mile delivery and other end-to-end ecommerce solutions. Alibaba and SingPost also entered into a joint strategic business development framework to further improve efficiency and integration between the companies.
The investment agreement, which must be approved by SingPost shareholders and regulators, calls for Alibaba Group to purchase 107,553,907 existing shares in SingPost, which trades on the Singapores stock exchange and, upon completion of the deal, Alibaba’s deemed interest on a fully diluted basis in SingPost will rise from 10.23% to 14.51%.
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