Alibaba’s Freshippo cuts valuation by $4b seeking fresh funds

Freshippo, the Chinese grocery retailer owned by the Alibaba Group, is looking to raise funds at a lower-than-expected valuation of US$6 billion, down from US$10 billion, due to China’s Covid-19 restrictions, Reuters reported, citing sources.

While Shanghai residents relied heavily on delivery services like those offered by Freshippo during a two-month lockdown in the city this year, companies struggled to keep pace with demand amid cracks in the supply chain due to Covid-19 restrictions in China. The lockdown in Shanghai, the biggest market for Freshippo, ate into the firm’s sales.

Investor confidence in the supermarket chain also waned as questions crept up over whether the loss-making company could keep growing or turn profitable in the near future amid strict anti-Covid policies.

Freshippo is looking to raise up to US$500 million from external investors, though the fundraise is yet to be finalized, according to the sources. A source also revealed that Freshippo still had a healthy cash flow and was in no hurry to raise funds.

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