Sequoia, CDH, Yunfeng back China's ZTO Freight
Sequoia Capital China, CDH Investments, and Yunfeng Capital have provided more than $100 million in Series A funding to ZTO Freight, an affiliate of US-listed Chinese delivery company ZTO Express.
ZTO Freight specializes in less-than-truckload (LTL) logistics, typically carrying packages of 10-300 kilograms. It provides an end-to-end service covering collection, packaging, insurance, delivery, and payment collection, as well as giving customers real-time updates on the progress of their orders.
The company was established in 2016 by Jianfa Lai, a director and longstanding executive at ZTO Express. The parent company agreed to invest RMB54 million ($8.3 million) for an 18% stake in ZTO Freight. While ZTO Express has risen to prominence on the back of the rise of e-commerce in China, coordinating pick-up and last-mile delivery of small packages, ZTO Freight focuses on larger shipments.
Since its establishment, the company has concentrated on recruiting a management team and building out nationwide delivery infrastructure. ZTO Freight said in a statement that on completion of the funding round it will increase investment in improving service quality and efficiency, expanding business scale, and strengthening infrastructure.
ZTO Freight is expected to benefit from the ZTO Express brand name and large customer base. The parent company is one of China’s five largest express delivery businesses, with 300,000 employees, 29,000 service outlets, 82 transshipment centers, 9,500 network partners, and 4,800 mainland transport vehicles. It delivered 6.21 billion parcels in 2017 and generated RMB13.1 billion ($2 billion) in revenue.
In October 2016, ZTO Express raised $1.4 billion through an IPO on the New York Stock Exchange. This represented a liquidity event for investors including Warburg Pincus, Sequoia, Gopher Capital, Hillhouse Capital, and Standard Chartered Private Equity. Last month, Alibaba Group and its logistics arm Cainiao Network agreed to buy a 10% stake in the company for $1.38 billion.
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