HONG KONG (AP) -- Alibaba Group Holding on Tuesday said it had scrapped plans to list its logistics unit Cainiao in Hong Kong, as it looks to prioritize growing its e-commerce business while facing challenging IPO market conditions.

Alibaba said Tuesday that it was withdrawing its initial public offering and listing application, and instead proposes purchasing all outstanding shares of Cainiao Smart Logistics Network.

The repurchase offer will value Cainiao at $10.3 billion. Alibaba currently holds a stake of 64% in the logistics unit, and the buyout offer will allow minority shareholders to sell their shares to Alibaba.

"Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building out a global logistics network, we believe this is an appropriate time to double down on Alibaba's investment in Cainiao," said Joe Tsai, chairman of Alibaba Group.

The company also said that current market conditions would "unlikely garner a valuation" that reflects Cainiao's strategic value to Alibaba's business.

The scrapped IPO comes as Alibaba has set its focus on growing its cloud computing and e-commerce businesses. Alibaba's e-commerce business has come under pressure from rivals such as PDD's Pinduoduo and ByteDance's Douyin, which often offer products at lower prices.

Cainiao handles much of Alibaba's e-commerce logistics, and operates a global logistics network that faciliates cross-border e-commerce.

Alibaba restructured its businesses last March, splitting them into six units that would eventually raise their own capital and go public.

Its cloud unit had been expected to be among the first to hold an initial public offering, but Alibaba later scrapped plans to spin-off the business, citing uncertainties over U.S. export curbs on advanced chips used for artificial intelligence.