Singapore Post Limited (SingPost) and Alibaba Group Holding Limited signed a joint venture agreement recently and thereafter announced three “new initiatives for collaboration and growth”.

These initiatives will strengthen and deepen the collaboration between the two companies, which started last year. The goal is to “increase e-commerce logistics collaboration in the future to build a leading e-commerce logistics platform to service the rapidly growing e-commerce businesses across Asia Pacific and beyond”, the companies said in a press statement.

For a start, as part of the first initiative, Alibaba will invest up to approximately S$ 92 million (US$67.85 million) in Quantium Solutions International (QSI) in exchange for a 34 per cent stake in the company. SingPost will hold the remaining 66 per cent of the equity of QSI.

 QSI, currently a wholly-owned subsidiary of SingPost provides “leading end-to-end e-commerce logistics and fulfilment services across the Asia Pacific region”, with a network across more than 10 countries.

 Post the investment, it is understood that QSI will “reorganise its business” and become the joint venture vehicle of SingPost and the Alibaba Group, allowing them to avail of the synergies thus created.

As a second initiative, Alibaba Group will purchase 107,553,907 new ordinary shares amounting to 5 per cent 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 per cent to 14.51 per cent,” the companies declared.

Finally, SingPost and Alibaba have also entered into “a joint strategic business development framework to further improve efficiency and integration of e-commerce logistics solutions”. SingPost and Alibaba will 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 drawn from their respective executives.

Lim Ho Kee, Chairman of SingPost, said: "The pace of transformation at SingPost has been accelerating steadily. As a postal service provider, we are on a burning platform, facing a global decline in mail revenue with trends like e-substitution and lifestyle changes. It is a win-win situation for both of us because we share similar goals and have a natural fit between our operations across Asia. On behalf of my fellow directors, I welcome Alibaba as one of our partners on the next phase of the journey."

Daniel Zhang, Chief Executive Officer of Alibaba Group, said, "Over the past year, Alibaba and SingPost have worked closely to explore cross border e-commerce opportunities and created a series of customised logistics solutions in various markets. This additional investment into SingPost and establishment of a joint venture signify our commitment in expanding our global logistics footprint, which in turn will help Chinese businesses sell, and global brands deliver more easily around the world."