Alibaba is set to invest S$279.1m in SingPost as the companies expand cooperation

Singapore Post and Alibaba Group, a Chinese e-commerce company, have announced a series of new initiatives for collaboration and growth following the signing of a joint venture agreement. The three initiatives signal the deepening of a business relationship that started in 2014 and a commitment from both parties to increase collaboration in the future to build a leading logistics platform to service rapidly growing e-commerce businesses across Asia Pacific and beyond.

The first initiative will see Alibaba invest up to S$92m in Quantium Solutions International for a 34% stake in the company, SingPost will hold the remaining 66% of the equity of the company. Quantium Solutions International is a wholly owned subsidiary of SingPost providing end to end e-commerce logistics and fulfilment services across the Asia Pacific region. Its network spans more than 10 countries and the company offers customers e-commerce logistics solutions and warehousing across Asia Pacific.

Following the investment Quantium Solutions International will reorganize its business and become the joint venture vehicle of SingPost and Alibaba Group. This is expected to allow it to ramp up its development of e-commerce logistics infrastructure and services. In addition, the company will also become a platform for both parties to strengthen their collaboration and realize synergies across their businesses. Quantium Solutions International will encompass e-commerce warehousing, last mile delivery and other end to end e-commerce solutions.

In the second initiative Alibaba Group will purchase 107,553,907 new ordinary shares amounting to 5% of the existing share capital of SingPost for S$187.1m. Upon completion, Alibaba’s deemed interest on a fully diluted basis in SingPost will rise from 10.23% to 14.51%. Alibaba Group’s acquisition of additional equity in SingPost is subject to Info-Communications Development Authority of Singapore (IDA) and SingPost’s shareholder approvals.

SingPost and Alibaba have also entered into a joint strategic business development framework to further improve efficiency and integration of e-commerce logistics solutions. In this third initiative SingPost and Alibaba plan to share their respective knowledge and leverage each other’s strengths to scale across the e-commerce logistics value chain. A joint Steering Committee will be created and will be drawn from their respective executives.

Wolfgang Baier, Group Chief Executive Officer of SingPost said, “We are now taking the next step by building a regional e-commerce logistics platform and infrastructure for e-commerce players across Asia Pacific based on Quantium Solutions – our e-commerce logistics subsidiary. Alibaba started as our customer and then last year became our shareholder and business partner. Today with the significant growth in e-commerce ahead, both of us are convinced of the long term value of working together in a win-win partnership for e-commerce businesses in Asia Pacific.”