Debt-Laden Fosun Weighs Stake Sale In Alibaba's Cainiao

  • Debt-laden Chinese conglomerate Fosun International, Ltd FOSUF FOSUY looked to offload a minority stake in Alibaba Group Holding Limited's BABA logistics arm Cainiao in a deal that could fetch up to $1 billion.
  • Fosun has appointed a financial adviser to run the sale of its stake of less than 5% in Cainiao, and the plan is at an early stage, Reuters reports.
  • The once-acquisitive conglomerate, which owns resorts brand Club Med among other assets, is looking to sell its stake in Cainiao with the firm's valuation of $18 billion - $20 billion.
  • Also Read: JD.Com Goes Aggressive On China's Common Prosperity Drive After Alibaba, Tencent
  • Fosun, controlled by billionaire entrepreneur Guo Guangchang, aimed to ease liquidity strains by selling non-core assets.
  • Fosun is among a handful of Chinese conglomerates which had rapidly expanded their business empires at home and overseas in the past decade, mainly via the debt-fuelled acquisition of assets ranging from luxury hotels and retail brands to soccer clubs.
  • In 2020, Fosun, which owned 6.7% of Cainiao, had already talked with potential buyers, including Alibaba, for its stake in the logistics firm as it needed fresh capital for new investments in other businesses.
  • It had sold down some of that stake over the past two years.
  • Fosun reportedly agreed to sell over $5 billion in assets this year.
  • Cainiao raked in 26 billion yuan in revenue in the six months that ended September, up 19% year-on-year and accounting for 6% of Alibaba's total revenue.
  • Rating agency Moody's in October downgraded Fosun's credit rating to B2 last month. It revised its outlook to "negative" from "ratings under review," saying the firm's cash on hand at the holding company level would be insufficient to cover its short-term debt maturing over the next 12 months.
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