Source: Caixin.

$Alibaba (BABA.US)$ / $BABA-W (09988.HK)$ There's been a return on investment in the e-commerce industry chain.

Yesterday, Southeast Asian e-commerce outsourcing company Synagistics debuted on the Hong Kong Stock Exchange in a De-SPAC form, becoming the first merger and acquisition case since the establishment of the SPAC listing mechanism in Hong Kong in 2022. Different from traditional listings, Synagistics was acquired as the target company and went public through a SPAC (special purpose acquisition company), and after the listing, the company was renamed $SYNAGISTICS (02562.HK)$.

It is worth noting that Synagistics is a company that Alibaba Singapore has invested in, with its stake once reaching as high as 47.22%.

Yesterday's opening, Lion Teng Holdings once soared by 150.25% to 50.05 Hong Kong dollars. As of the close, Lion Teng Holdings closed at 17 Hong Kong dollars, down 15%, with a total market value of 7.381 billion Hong Kong dollars.

Alibaba is the largest shareholder.

The official website shows that Synagistics is a Southeast Asian e-commerce operation company, and its subsidiary Synagie is the leading data-driven digital solutions platform in Southeast Asia. As of now, Synagistics has more than 600 brand partners, including Lululemon, Estee Lauder, Shiseido, and more.

In 2014, the predecessor of Synagistics - Synagie was founded in Singapore by Li Suping, Dai Kexin, and Li Yu. Over the years, Synagie has gradually risen to become an important platform for data-driven digital commerce solutions in the Southeast Asian region.

In 2020, Synagie encountered a strategic turning point. The company sold its e-commerce business for up to $61.7 million to a consortium of investors, including the company's three founders, Alibaba's Singapore branch, and a fund managed by Gobi Partners Group. This transaction led to the birth of Synagistics.

In the announcement, Synagistics divides its main business into two parts: D2B and D2C.

Among them, the D2B model is e-commerce operation, providing brand owners on platforms such as Lazada and Shopee in Southeast Asia with a series of e-commerce solutions, including online store operation, supply chain and fulfillment, quality inspection after-sales, data analysis, as well as digital marketing, KOL short video promotion, and live streaming for full-chain e-commerce services. The D2C model essentially refers to online retail, where Synagistics purchases products from brand owners and sells them directly to consumers through e-commerce channels.

Financial data shows that in 2021, 2022, and 2023, Synagistics' revenue was 0.086 billion, 0.113 billion, and 127 million Singapore dollars respectively, with corresponding net losses of 11.012 million, 13.127 million, and 17.31 million Singapore dollars. Among them, 20% of the total revenue in 2023 came from agency operations, while online retail contributed approximately 80%, with an average order value of 35.5 Singapore dollars (about 191 RMB). The gross margin of agency operations is close to 70%, and the gross margin of online retail is 13.8%.

In terms of equity structure, before the completion of the special purpose acquisition company merger transaction, Alibaba Singapore held a 47.2% stake, ranking first among the largest shareholders, Meranti held 22.2%, Li Suping held 20.7%, Dai Kexin held 6.4%, and Li Yu (Li Suping's sister) held 3.4%. Although Alibaba's stake has decreased after the merger transaction, it still maintains the position of the single largest shareholder.

It is worth noting that, including Synagistics, Alibaba Group is continuously penetrating multiple overseas e-commerce markets by investing in and holding stakes in local well-known e-commerce platforms.

In the Southeast Asian region, Alibaba's holdings Lazada has become the e-commerce leader in that area. Since investing 1 billion US dollars to take control in 2016, Alibaba has injected capital multiple times, and currently, its stake is close to full ownership. By acquiring about 85% of Trendyol's shares, Alibaba has successfully entered the Turkish market.

In South Asia, Alibaba's fully acquired Daraz has become the largest cross-border e-commerce platform in that region. In addition, Alibaba further solidified its position in the Southeast Asian e-commerce market by investing in Indonesia's largest e-commerce platform, Tokopedia.

Zhuang Shuai, the founder of Bailian Consultancy, stated in an interview with the Star Market Daily that Alibaba's overseas expansion strategy is clear, swiftly achieving localization by investing in well-known local e-commerce platforms to effectively address the challenge of lacking local retail and logistics experience.

In his view, with the deep implementation of Alibaba's global strategy, its overseas e-commerce business is expected to see a more vigorous development momentum, further consolidating and expanding its leading position in the global e-commerce field.

Hong Kong's first De-SPAC

Since the Hong Kong Stock Exchange introduced the SPAC listing mechanism in 2022, this innovative financing method has attracted much attention in the market. However, despite the successful listing of 5 SPACs in Hong Kong so far, there have been few breakthrough cases in merger transactions (De-SPAC).

According to the "Star Market Daily" reporter, at least two merger projects submitted applications to the Hong Kong Stock Exchange last year. Aquila had announced an intention to merge with mainland steel industry e-commerce platform FindSteell Group, and Vision Deal also signed a cooperation agreement with mainland's largest mobile voice social network platform Quwan Group. However, both of these highly anticipated merger transactions have been shelved, and the specific reasons remain unclear.

At the same time, there are still two SPAC companies in the market—Interra and TechStar Acquisition—that have not yet disclosed their merger targets.

Despite the overall market environment not being optimistic, Synagistics successfully listed on the Hong Kong Stock Exchange through the acquisition by Hongde Acquisition, becoming the first De-SPAC transaction in the Hong Kong stock market, and also the first listed operating company in Southeast Asia.

Huang Lichong, CEO of Hui Sheng International Capital, stated in an interview with the "Star Market Daily" that Synagistics' successful listing marks an important step for the Chinese Hong Kong capital market in the SPAC trading field.

He pointed out that compared to the US and Singapore, the listing threshold for Hong Kong SPACs is relatively high, which helps ensure the quality of the market and the interests of investors, but it also increases the difficulty of asset injection.

Huang Lichong believes that although shell SPAC listings can provide a fast track for companies to go public, they also come with high costs, complex financial instruments, and challenges in asset injection. Therefore, for investors participating in such transactions, it is necessary to fully understand the complexity of the transaction and accurately assess the related risks. In the future, with the continuous changes in the market environment, the SPAC listing mechanism of the Hong Kong Stock Exchange may usher in new development opportunities.

Editor / jayden