Singapore Post and Alibaba Group Holdings on Wednesday unveiled a slew of initiatives which include the Chinese e-commerce giant taking a bigger stake in the Singapore postal group to spur growth in their ecommerce logistics platform across Asia.
Alibaba will invest up to about S$92 million (US$67.85 million) for a 34 per cent stake in SingPost's subsidiary, Quantium Solutions International (QSI). SingPost will hold the remaining 66 percent stake in QSI, which provides end-to-end ecommerce logistics and fulfilment services across the Asia Pacific region.
"QSI will reorganise its business and become the joint venture vehicle of SingPost and Alibaba Group. This will allow QSI to ramp up its development of ecommerce logistics infrastructure and services,'' SingPost said, adding that QSI will encompass ecommerce warehousing, last mile delivery and other end-to-end ecommerce solutions.
Alibaba will buy 107,553,907 new SingPost shares amounting to a 5 percent stake in the postal group for S$187.1 million (US$138.6 million).
On completion, Alibaba's deemed interest on a fully diluted basis in SingPost will rise to 14.51 per cent from 10.23 percent. The acquisition is subject to Info-Communications Development Authority of Singapore (IDA) and SingPost's shareholder approvals.
Dr. Wolfgang Baier, Group Chief Executive Officer of SingPost, said: "We are now taking the next step by building a regional ecommerce logistics platform and infrastructure for ecommerce players across Asia Pacific based on Quantium Solutions - our ecommerce logistics subsidiary. Alibaba started as our customer and then last year became our shareholder and business partner.''
Alibaba Group acquired its initial stake in SingPost in 2014.
SingPost and Alibaba have also entered into a joint strategic business development framework to further improve efficiency and integration of ecommerce logistics solutions. A joint steering committee will be created and drawn from their respective executives.
Lim Ho Kee, SingPost's chairman, said the pace of transformation at SingPost has been accelerating steadily.
"As a postal service provider, we are on a burning platform, facing a global decline in mail revenue with trends like e-substitution and lifestyle changes. It is a win-win situation for both of us because we share similar goals and have a natural fit between our operations across Asia. On behalf of my fellow directors, I welcome Alibaba as one of our partners on the next phase of the journey."
Daniel Zhang, Chief Executive Officer of Alibaba Group, said the additional investment into SingPost and establishment of a joint venture signify the commitment in expanding the global logistics footprint, which will help Chinese businesses sell, and global brands deliver more easily around the world.