Alibaba Group Holding Ltd. is calling off an initial public offering for its Cainiao logistics arm in Hong Kong, shelving a much-anticipated debut that could have raised more than $1 billion.

China’s e-commerce pioneer, which owns 64 percent of Cainiao, said in a Tuesday filing it now plans to buy out all remaining stock held by investors and employees for $3.75 billion. The company decided to postpone the transaction because of poor market conditions, people familiar with the matter said. It lost its taste for the deal this year as stocks waned, the people said, asking to remain anonymous discussing a private matter. Still, Alibaba could choose to revive the IPO should markets recover, they added.

It’s the second time Alibaba has nixed a high-profile coming-out party for one of its main businesses. In 2023, the Chinese internet firm stunned the market when it called off a listing of its $11 billion cloud unit. Cainiao Smart Logistics Network Ltd., which handles a major chunk of the millions of parcels that Alibaba’s e-commerce business generates daily, was considered one of its fastest-growing enterprises.

Last year, Alibaba also put plans to debut its Freshippo grocery chain on the backburner. Its retreat coincides with growing uncertainty in public markets as Beijing grapples with a property crisis, loss of foreign investor confidence and the resultant economic downturn. At the same time, domestically oriented businesses are struggling to grow their topline because of waning consumer confidence.

“Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building out a global logistics network, we believe this is an appropriate time to double down on Alibaba’s investment in Cainiao,” Alibaba chairman Joseph Tsai said in a blogpost Tuesday.

Alibaba is still grappling with fundamental questions surrounding the once-dominant internet company — a barometer of Chinese demand. Its performance underscored a loss of market share to rivals such as PDD and ByteDance Ltd. It posted a lower-than-projected 5 percent rise in December quarter revenue to 260.3 billion yuan ($36.2 billion), well off the pace of previous years.

Fuelling the uncertainty, the company is going through a complicated multi-way split intended to create several independent businesses and rejuvenate the national icon. The company last year outlined plans to float its Freshippo grocery chain and Cainiao logistics arm. But Tsai last month appeared to soften its stance on those plans, saying Alibaba was in no hurry to float Cainiao because challenging market conditions would prevent it from reaping fair value.

Cainiao, which filed for its IPO about six months ago in September, was valued at about $10.3 billion in the minority shareholder buyout.

Alibaba — which after years of frenetic investment now controls a vast portfolio of assets — is now actively looking to sell off some of those non-core holdings, he added. It’s exploring ways to offload the InTime department store chain and other retail operations, Bloomberg News has reported.

By Pei Li

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