The company had initially targeted a valuation of $6 billion to $10 billion, but after discussions with potential investors, Alibaba concluded that Freshippo could achieve a valuation of around $4 billion in the listing, Bloomberg reported Friday (Sept. 8), citing unnamed sources.
Alibaba did not immediately reply to PYMNTS’ request for comment.
The capital management committee of Alibaba, which is overseeing the breakup of the company, has decided to wait for a more favorable market before moving forward with the Freshippo IPO, according to the report. Instead, the company will prioritize listings of other units.
This delay could potentially mean that Alibaba will miss its target to float Freshippo by May 2024, the report said. However, there is still a possibility for Freshippo to proceed with its listing plan once the retail environment and economy in China improve, boosting investor sentiment in the sector.
Freshippo offers a supermarket experience that includes both a dine-in restaurant and 30-minute home delivery, per the report. The company has gained popularity for its high-tech automatic order picking system and the use of robots to deliver food to dine-in customers. Its grocery brand Hema Xiansheng turned profitable in 2022, according to the report.
The company was expected to be one of the first units of Alibaba to go public after the company announced its breakup in March, the report.
It was reported in January 2022 that Alibaba was weighing a fundraise for Freshipppo. At that time, the grocery chain had an estimated valuation of $10 billion.
Alibaba announced in March that it was splitting into six pieces and plans to take these new business public. The Chinese eCommerce company said at the time that it was undergoing the biggest revamp in its nearly 25-year history. Reuters reported that the move came as the country’s government was stepping back from a broad regulatory crackdown.
“The original intention and fundamental purpose of this reform is to make our organization more agile, shorten decision making links and respond faster,” Alibaba CEO Daniel Zhang said at the time.