June 23, 2020 / 8:17 AM / 11 days ago

Exclusive: China's Fosun seeks sale of $1.3 billion stake in Alibaba's Cainiao - sources

HONG KONG/BEIJING (Reuters) - Fosun International (0656.HK) is in talks with Alibaba and others to sell a stake worth $1.3 billion (£1.04 billion) in the e-commerce giant’s Cainiao, three people said, at a time when Alibaba has been increasing its holdings in the logistics affiliate.

FILE PHOTO: An employee works at a Tmall logistic centre in Suzhou, Jiangsu province, China, October 28, 2015. Picture taken October 28, 2015. REUTERS/Aly Song/File Photo

Fosun, which owns resorts brand Club Med and controls French fashion house Lanvin among other assets, is looking to sell part or all of its 6.7% stake in Cainiao at a valuation of nearly $20 billion, two of the people said.

The once-acquisitive conglomerate has been talking to Chinese investment firms and companies, including Alibaba, over the past few months about the sale, and wants to use the proceeds for new investments in consumer and healthcare businesses, the two people said.

Alibaba (BABA.N)(9988.HK) is considering buying part of the stake from Fosun, one of the people said.

Alibaba paid 23.3 billion yuan in November to raise its stake in Cainiao to 63% from 51%, implying a valuation close to 200 billion yuan ($28 billion) - a number confirmed by the three sources.

It also bought an equity interest from some unidentified existing shareholder in November, according to the first two people, at a valuation of $20 billion. Some discount for secondary share sales in private companies is common.

All three people who spoke to Reuters had knowledge of the potential stake sale but did not want to be named as the information was private.

Alibaba, Cainiao and Fosun declined to comment.

In 2013, Fosun had invested 500 million yuan as a co-founder of Cainiao, the logistics company that underpins delivery for Alibaba’s e-commerce marketplaces.

Cainiao raked in 22.23 billion yuan in revenue in the year ended March, up 49% from a year ago and accounting for 4% of Alibaba’s total revenue.

Alibaba first took overall control here of the affiliate in 2017, lifting its stake to 51% from 47%, pledging to spend 100 billion yuan over five years to build out a global logistics network.

Fosun and other Chinese conglomerates have in recent years slowed their dealmaking following a crackdown by Beijing on flashy overseas acquisitions.

Fosun has struck deals worth a combined $1.4 billion since 2018, compared with a total of $10.11 billion between 2014 and 2017, Refinitiv data showed.

Reporting by Julie Zhu in Hong Kong and Cheng Leng in Beijing; Editing by Jennifer Hughes and Himani Sarkar

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