(Yicai) April 28 -- Alibaba Group Holding has been approved by the Hong Kong Stock Exchange to spin off a logistics and warehouse park and list it as a real estate investment trust in Shenzhen, a key step in the Chinese internet giant monetizing its infrastructure assets.

The HKEX gave Alibaba the go-ahead on March 13, the Hangzhou-based company said in an exchange filing yesterday.

Alibaba intends to spin off Jiaxing Park. The infrastructure asset is located in Jiaxing, a city in China’s eastern Zhejiang province, and is owned by Aliababa’s logistics arm Cainiao Smart Logistics Network. It will then be listed as CICC Cainiao Logistics Warehouse Infrastructure Reit on the Shenzhen Stock Exchange and will be managed by CICC Fund Management.

Alibaba has already submitted a listing application with both the China Securities Regulatory Commission and the Shenzhen Stock Exchange, Yicai learned from a source in the company.

Infrastructure REITs turn income-generating infrastructure assets into tradable equity products. Since China launched its pilot program for infrastructure REITs in 2020, a number of companies in the logistics and related sectors have either listed REITs or are going ahead with similar projects.

Once Jiaxing Park’s spin-off is completed, the asset will be no longer be included in Alibaba's consolidated financial statements.

The move will have limited impact on Alibaba as it is a way for the business to put its asset-heavy holdings to better use, Zhao Xiaomin, an express delivery expert, told Yicai. For Cainiao, which is now focused on international expansion and technology development, it offers an additional financing channel tied directly to its own assets, he added.

Located in the Yangtze River Delta region, the Jiaxing Park has a high occupancy rate and operational efficiency, along with stable cash flow, according to Zhao. The REIT listing will also enable Cainiao to unlock asset value.

Zhao is optimistic about the prospects for Cainiao's REIT issuance. He believes that publicly offered REITs backed by e-commerce infrastructure or logistics and warehousing parks have strong market potential.

Over time, more logistics parks could be packaged into REITs, creating a sustainable capital recycling mechanism, Zhao said, pointing out that comparable REITs, such as warehousing and logistics REITs under Alibaba rival JD.Com, made follow-on offerings shortly after their issuance.

Editors: Tang Shihua, Futura Costaglione