Alibaba Group Holding Ltd agreed with STO Express Co Ltd to buy 14 percent of its stake for $693 million, making it a fourth significant investment by the e-commerce giant in a Chinese courier company.
Controlling shareholder of STO Express is intending to open a new subsidiary of the courier firm which will have stakes of about 29.9 percent in the parent company, according to a statement of STO Express on Monday.
In that new subsidiary, Alibaba will make an investment of 4.66 billion yuan ($693.44 million) to get 49 percent of its stakes through which 14 percent of stakes in STO Express will come under the ownership of Alibaba, the statement said.
Investment in a company among top five express delivery service companies in China has been confirmed by Alibaba in a separate statement.
Alibaba will expand its existing relationship with STO to for last mile delivery across the country, technological improvements and a New Retail logistic, Alibaba said in its statement.
Through current investment, Alibaba is heading forward to achieve its goal of delivery time of 24 hours within China and 72 hours across the globe, Alibaba added.
After buying minority stakes in Best Inc, ZTO Express (Cayman) Inc and YTO Express, Alibaba’s current investment in STO Express is the fourth largest investment made by the retail giant in Chinese courier sector.
The Shanghai-based STO though stands among big five courier service companies in China, but is counted as smallest in terms of market capitalization of 31.3 billion yuan against that of 106.5 billion yuan for ZTO Express and 153.1 billion yuan for SF Holding.
STO Express, which in the past transported freight for a mix of companies, is already working with Alibaba through its logistics division Cainiao that was launched in 2013.
The data sharing and software provided by Cainiao’s tracking program, make the carriers, warehouses and other logistics companies to deliver packages to shoppers on Alibaba’s largest e-commerce sites Taobao and T-mall.