China's Best targets $1b IPO, PE backers seek partial exits

The company will sell about 71.4 million American Depository Shares (ADS) at $13.00-15.00 apiece, according to a filing. This includes 8.54 million shares held by existing investors, with China Renaissance Capital Investment (CRCI), China Everbright, Goldman Sachs, CDH Investments, Hina Group, China Development Bank International (CDBI), Bank of China International (BOCI), and the International Finance Corporation (IFC) among those offloading a portion of their shares.

Alibaba holds a 23.4% stake in Best, while Cainiao Network Technology – a logistics platform launched by Alibaba – has 5.6%. Johnny Chou, the former co-president of Google China who founded Best in 2007, holds a 14.7% interest. CRCI and IDG Capital, which is not selling any shares, are the largest private equity investors with 11.3% and 6.2%, respectively. The multi-class share offering means that 83.3% of the voting power will sit with Chou and Alibaba.

Best’s most recent funding round closed at $760 million in September 2016, led by Everbright Financial Holding Asset Management and CITIC Private Equity. Cainiao came into that round as a new investor, alongside CDBI, BOCI, Fosun International, SBCVC, Huarong International Financial, and Liyue Investment. IFC earlier disclosed it would put in $30 million while CDIB Capital said it contributed $45 million.

Various other groups re-upped, including Alibaba, CRCI, IDG, Foxconn Technology Group, Goldman, Walden International, CDH, Hina, 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.

The backbone of Best’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 freight and supply chain management services, primarily to e-commerce companies. Other services cover financing for supply chain vendors, bulk purchasing services for convenience store operators, and an online platform that enables agents to 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 121 million supply chain orders, delivered 2.2 billion parcels, shipped three million metric tons of freight, and fulfilled more than 680,000 store orders. 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
• Industrials
• Support services
• China
• Logistics
• Alibaba Group
• China Renaissance Capital Investment
• IDG Capital Partners
• CDH Investments Management
• Goldman Sachs
• China Everbright
• IFC