Alibaba’s grocery arm gears up for Hong Kong IPO
FRESHIPPO, the Alibaba Group Holding grocery chain known for selling cooked lobsters and grouper freshly chosen from fish-tanks in the store, has started preparations for a Hong Kong initial public offering, people familiar with the matter said.
The company is working with banks including China International Capital and Morgan Stanley to help prepare for the first-time share sale of the unit, known in Chinese as Hema, the people said. The plan is still at an early stage and a listing might not happen until next year or later, said one of the people, who asked not to be identified as the information is private.
The size of Freshippo’s IPO and its target valuation are still under consideration, the people said. In January 2022, Freshippo was considering raising funds at a valuation of US$10 billion, people familiar with the matter said. Since then, valuations of privately-held companies globally have fallen as stocks plunged and investors shied away from riskier assets.
Deliberations are ongoing and details of the IPO, including the final advisory lineup, could still change, according to the people. Alibaba may also decide not to proceed with a listing for Freshippo, they said. A spokesperson for Alibaba didn’t immediately reply to a request for comment, while representatives for CICC and Morgan Stanley declined to comment.
Freshippo is among the first of several Alibaba units in the pipeline to be listed after the Chinese tech giant last month made a surprise announcement to split up its US$250 billion business. The firm will be divided into six main units in sectors including e-commerce, media and cloud computing. Cainiao Network Technology, Alibaba’s US$20 billion logistics arm, is set for an IPO as soon as the end of 2023, Bloomberg News reported.
Freshippo offers a Sam’s Club-like supermarket experience that includes a dine-in restaurant as well as 30-minute home delivery. Its grocery brand Hema Xiansheng turned profitable in 2022, according to a company website citing an internal memo from Hema chief executive officer Hou Yi.
Started in 2016, Shanghai-headquartered Freshippo had more than 270 self-operated stores across China as of March 31, 2022, according to its website. It facilitates high-tech automatic order picking that transports goods via conveyors attached to the roof of the store, and uses robots to deliver food for its dine-in customers. BLOOMBERG
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