PE, Alibaba-backed Baozun set terms for US IPO
Baozun, a Chinese e-commerce platform solutions provider that has several strategic and private equity backers, has set terms to raise up to $177.1 million through a US IPO.
The company plans to sell 11 million American Depository Shares (ADS) at $12.00-14.00 apiece, according to a regulatory filing. This will rise to 12.65 million shares if the underwriters exercise their over-allotment option in full. The proceeds will be used for sales and marketing, investment in R&D and technology, and warehousing and fulfillment infrastructure expansion.
Alibaba Investment, a unit of Alibaba Group, is the largest shareholder with a 23.5% stake in the business. This will be diluted to 18.2% following the offering. Crescent Group currently has a 23.1% interest, while SoftBank Corp. owns 17.8%, Goldman Sachs has 9.8% and Infinity Group has 6.6%.
Founded in 2007, Baozun helps clients design and operate e-commerce platforms, providing IT infrastructure, customer services, digital marketing, and warehousing and logistics services. Baozun had about 20% market share by transaction value last year in China, according to iResearch Consulting. As of March, it worked with 94 global brands, including Philips, Nike, Microsoft and Haagen-Dazs.
In 2009 and 2010, Hangzhou Ali Venture Investment, a VC subsidiary owned by Alibaba founders Jack Ma and Simon Xie, invested RMB32.7 million ($5.3 million) in Baozun. The following year, Crescent and New Access Capital committed RMB119.1 million, while Hangzhou Ali added to its stake for RMB12.9 million.
In September 2012, Baozun raised RMB266.2 million from Goldman Sachs, Infinity and the three existing investors. This was followed by a $23.9 million commitment from SoftBank in 2014.
The company generates three quarters of its revenue from product sales on behalf of customers under a distribution model. It also receives fees derived from particular services, usually based on factors such as number of orders fulfilled. Gross merchandise volume came to RMB1.16 billion in 2014, up from RMB573.7 million the previous year, while net revenue rose from RMB268.5 million to RMB477.2 million.
Baozun has yet to make a profit on an annual basis. It reported net losses of RMB37.8 million in 2013 and RMB59.8 million in 2014.
Morgan Stanley, Credit Suisse and Bank of America Merrill Lynch are underwriting the offering.
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