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Alibaba and SingPost expand eCommerce logistics cooperation 08 July 2015

Strategic business development framework to improve efficiency and integration

Singapore Post and Alibaba 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 last year and a commitment from both parties to increase eCommerce logistics collaboration in the future to build a leading eCommerce logistics platform to service the rapidly growing eCommerce businesses across Asia Pacific and beyond.

In the first initiative, Alibaba will invest up to approximately S$92.0 million (US$67.85 million) for a 34.0% stake in Quantium Solutions International (QSI), SingPost will hold the remaining 66.0%. QSI is currently a wholly owned subsidiary of SingPost providing leading end-to-end eCommerce logistics and fulfilment services across the Asia Pacific region. Its network spans more than 10 countries and the Company offers customers eCommerce logistics solutions and warehousing across Asia Pacific.

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. In addition, QSI will also become a platform for both parties to strengthen their collaboration and realise synergies across their businesses. QSI will encompass eCommerce warehousing, last mile delivery and other end-to-end eCommerce solutions.

In a second initiative, Alibaba will purchase 107,553,907 new ordinary shares amounting to 5.0% of the existing share capital of SingPost for S$187.1 million (US$138.6 million). Upon completion, Alibaba's deemed interest on a fully diluted basis in SingPost will rise from 10.23% to 14.51%. Alibaba's acquisition of additional equity in SingPost is subject to Info-Communications Development Authority of Singapore (IDA) and SingPost's shareholder approvals. Alibaba acquired its initial stake in SingPost in 2014.

A third initiative sees SingPost and Alibaba enter into a joint strategic business development framework to further improve efficiency and integration of eCommerce logistics solutions. SingPost and Alibaba will share their respective knowledge and leverage each other's strengths to scale across the eCommerce logistics value chain. A joint Steering Committee will be created and drawn from their respective executives.

Over the past year, Alibaba and SingPost have worked closely to explore cross border eCommerce opportunities and created a series of customised logistics solutions in various markets. This additional investment into SingPost and establishment of a joint venture signify Alibaba’s commitment in expanding its global logistics footprint, which in turn will help Chinese businesses sell, and global brands deliver more easily around the world.

Alibaba started as a SingPost customer and then last year became a shareholder and business partner. Today with the significant growth in eCommerce ahead, both companies are convinced of the long term value of working together in a win-win partnership for eCommerce businesses in Asia Pacific.