China’s JD.com acquires VC-backed logistics player
Chinese e-commerce giant JD.com has agreed to pay RMB3 billion ($432 million) for a controlling stake in Kuayue Express, a local VC-backed logistics operator.
JD.com is transacting via its supply chain subsidiary JD Logistics, which raised $2.5 billion in 2018 from a group including Sequoia Capital China, Hillhouse Capital, Cathay Capital Private Equity, CDB Capital, and Tencent Holdings, among others. It will acquire existing shares and subscribe to new shares in Kuayue, which is backed by Sequoia China and Eastern Bell Capital. Eastern Bell is also an investor in JD Logistics.
Kuayue Express, also known as KY Express and KYE Group, has 32 subsidiaries, more than 50,000 employees and a fleet of 15,000 transport vehicles servicing some 3,000 business outlets. The company positions itself as a “limited-time” express logistics specialist, having launched three first-of-their-kind products in China: same day, next day, and alternate day delivery. It also offers a 24-hour free to-door service.
“Kuayue Express is a reliable delivery services provider and industry leader in express courier services with innovative technology and advanced operations,” Zhenhui Wang, CEO of JD Logistics, said in a statement. “Collaborating with Kuayue Express advances our integrated supply chain management, technology initiatives and service expansion to third party merchants. We will leverage our respective advantages and the synergy the collaboration creates to enhance the client experience and increase overall supply chain efficiency for JD and society at large.”
It extends a spate of logistics-focused investment activity by JD.com as it shifts away from consumer-facing operations toward more enterprise-facing revenue streams. Earlier this month, the company invested $100 million in Li & Fung, a Hong Kong logistics player that recently won support from warehousing industry operator and investor GLP. Meanwhile, JD Logistics has reached a first close on a technology fund targeting RMB1.5 billion and its industrial supply chain counterpart, JD MRO, has raised a $230 million Series A round that included Sequoia China.
Rapid delivery has become a more important priority for China’s e-commerce leaders as the sector has matured. Last year, Alibaba Group invested $3.3 billion in its PE-backed shipping affiliate Cainiao Smart Logistics Network with a view to shortening delivery times to 24 hours in China and 72 hours overseas. Cainiao network members include STO Express, Yunda Express, YTO Express, ZTO Express, and Best Express. Former Cainiao member SF Express listed in Shenzhen in 2017 after receiving investment from several PE firms. It currently has a market capitalization around $42 million.
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