PE-backed Chinese logistics player files for US IPO

It is set to be only the sixth US listing by a PE-backed Chinese company in two years, emphasizing the appeal of logistics businesses on the back of the country’s e-commerce boom. One of the other IPOs was by ZTO Express, which raised $1.4 billion last October. Three other operators – SF Express, YTO Express, and STO Express – have all gone public in the last two years through domestic reverse mergers.

According to a filing, Alibaba holds a 23.4% stake in Best, while Cainiao Network Technology – a logistics platform launched by Alibaba – has 5.6%. The larger private equity investors include China Renaissance Capital Investment (CRCI) and IDG Capital, with 11.3% and 6.2%, respectively.

Various other PE firms fall below the 5% threshold. Best’s most recent funding round closed at $760 million in September 2016, led by Everbright Financial Holding Asset Management and CITIC Private Equity. Both have board representation.

Cainiao came into that round as a new investor, alongside China Development Bank International, Bank of China International-controlled CITP Advisors, Fosun International, SBCVC, Huarong International Financial, and Liyue Investment. The International Finance Corporation (IFC) and CDIB Capital separately disclosed they put in $30 million and $45 million, respectively.

A string of other groups also re-upped, among them Alibaba, CRCI, IDG, Foxconn Technology Group, Goldman Sachs, Walden International, CDH Investments, The Hina Group, and GSI Investment. According to AVCJ Research’s records, Walden and CDH were the first investors in Best in 2010. Alibaba, Hina and Walden then participated in a second round the following year.

Best Logistics was founded in 2007 by Johnny Chou, formerly co-president of Google China, who holds a 14.7% stake. The backbone of the Hangzhou-based company’s operation is Best Cloud, which uses big data analytics and machine learning to provide complex supply chain solutions.

These solutions cover express, less-than-truckload (LTL) freight and supply chain management services, primarily to e-commerce companies. It also offers financing for supply chain vendors and bulk purchasing services for convenience store operators, as well as operating an online platform through which agents can source truckload capacity from independent providers.

As of March, Best had 290 order fulfillment centers; 63 hubs, 153 sorting centers, and 23,000 service stations for express services; 69 hubs, 103 sorting centers, and 4,000 service stations for freight services; and more than 250,000 stores in its bulk purchasing program. The company works with more than 8,000 franchisee partners, which operate the bulk of the order fulfillment centers and service stations.

For the year ended December 2016, Best claims to have fulfilled 122 million supply chain orders, delivered 2.2 billion parcels, and shipped three million metric tons of freight. The company posted revenue of RMB8.84 billion ($1.28 billion) for the year, up from RMB5.26 billion in 2015. Its net loss grew from RMB1.01 billion to RMB1.36 billion.

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• Topics
• Greater China
• IPO
• Support services
• China
• Exit
• Logistics
• IDG Capital Partners
• China Renaissance Capital Investment
• Alibaba Group