PE-backed SF Express targets $6.6b Shenzhen reverse merger
China’s largest express delivery services provider SF Express, which is backed by several PE investors, is looking to list in Shenzhen through a reverse merger that values the business at RMB43.3 billion ($6.6 billion).
According to a filing, Shenzhen-listed shell company Maanshan Dingtai Rare Earth & New Materials will acquire 100% of SF Express through an asset swap and a share issue.
The listed company will exchange assets worth RMB800 million with SF Express and then issue RMB42.5 billion worth of new shares in exchange for SF Express shares held by other stakeholders. Upon completion of the deal, SF Express chairman Wei Wang will become the controlling shareholder of the listed entity.
As part of the transaction, Maanshan Dingtai plans to raise up to RMB8 billion in a private placement of shares to 10 private investors. The new funding will be used to support SF Express' business expansion by purchasing air transportation-related equipment and developing cold chain logistics solutions.
Founded in 1993, Shenzhen-based SF Express has built a nationwide logistics network, including Hong Kong, Macau and Taiwan. It has also expanded overseas and now serves South Korea, Singapore, Malaysia, Japan and the US. As of July 2015, the delivery firm had about 340,000 employees, 16,000 vehicles and 19 freight aircraft.
Revenue came to RMB47.3 billion last year, up from RMB38.2 billion in 2014, while net profit jumped from RMB1.1 billion to RMB2.0 billion over the same period.
In August 2013, a consortium comprising CITIC Capital, Oriza Holdings, China Merchants Group and Jade Capital bought a 25% stake in SF Express for a reported RMB8 billion. According to the filing, CITIC, China Merchants and Oriza each own a 6.75% stake in the company, while Jade Capital has a 1.35%.
The company told local media in March that it had hired CITIC Securities, China Merchant Securities and Huatai Securities as advisers for a potential A-share IPO.
Smaller domestic player YTO Express, which is backed by Alibaba Group and Yunfeng Capital, announced in March that it would target a reverse merger in Shanghai worth RMB17.5 billion. Another delivery firm, Shentong (STO) Express, listed in Shenzhen through a backdoor listing in December.
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