Singapore Post Ltd. jumped to a record after Alibaba Group Holding Ltd., China’s biggest e-commerce company, agreed to buy a 10 percent stake in the company to develop its logistics in Southeast Asia.
SingPost shares climbed 8.4 percent to S$1.68 at the close in Singapore, the highest since it went public in 2003. Alibaba will spend S$312.5 million ($249 million) acquiring about 220 million new and existing shares and the companies will enter talks for an e-commerce logistics venture, the Singapore-based company said in a statement.
“There’s definitely synergies between the two companies,” Andrea Isabel, an analyst at UOB-Kay Hian Holdings Ltd. in Singapore, said by phone. “Alibaba doesn’t have their in-house logistics and the partnership will definitely help them. The deal will help SingPost build their presence in China.”
The purchase price of S$1.42 a share is 8.4 percent lower than the close on May 27. The investment connects SingPost to billionaire Jack Ma as he expands Alibaba’s logistics to build a bigger network for shipping goods sold on its platforms as it heads toward an IPO that may be bigger than Facebook Inc.
“Besides the creation of new relationships and opportunities for strategic cooperation with Alibaba, this move will allow it to benefit from Alibaba’s expertise in e-commerce and business volumes,” OCBC Investment Research analysts Low Pei Han and Andy Wong wrote in a report today.
Yesterday’s deal will make the Hangzhou, China-based company the second-largest investor in Singapore’s former state-owned mail service after Singapore Telecommunications Ltd., SingPost Chief Executive Officer Wolfgang Baier said.
Singapore Telecommunications or SingTel’s stake in SingPost will drop to about 23 percent from 26 percent, Baier said on a conference call with reporters yesterday.
In March, Alibaba agreed to invest about $692 million in Intime Retail Group Co., owner of department stores and supermarkets in China. In December, the company agreed to spend HK$2.82 billion ($364 million) on home-appliance maker Haier Electronics Group Co. and its logistics business.
SingPost’s sales from e-commerce business accounted for 26 percent of its revenue and that figure is expected to increase further, Baier said, declining to provide figures.
SingPost shares have risen 31 percent this year, compared with the 3.7 percent gain in the Singapore benchmark Straits Times Index.
Alibaba this month filed for an IPO. The company’s market value is estimated at $168 billion according to analyst estimates, bigger than 95 percent of the Standard & Poor’s 500 Index. The company is looking to sell about a 12 percent stake, people familiar with the matter have said, which would make the offer around $20 billion based on the estimated value and eclipse the IPOs of Facebook and Visa Inc.
Ma, the founder of Alibaba, has a net worth valued at $12.6 billion, according to the Bloomberg Billionaires Index, making him the third-richest person in China.