Alibaba, Yunfeng-backed YTO Express set for $2.7b backdoor listing
Chinese clothing maker Dalian Dayang Trands has agreed to acquire Shanghai's YTO Express, which is backed by Alibaba Group and Yunfeng Capital, for RMB17.5 billion ($2.7 billion), resulting in a backdoor listing in Shanghai for the courier service provider.
According to a filing, Dayang Trands will acquire YTO Express through an asset swap and share issue. First, Dayang Trands will sell RMB1.2 billion worth of assets to YTO Express' shareholders. Jiaolong Group - a vehicle owned by YTO's founders - has agreed to pay RMB1.1 billion as part of the transaction, while Yunfeng will contribute RMB98 million. After that, the publicly-traded Dayang Trands will issue RMB17.5 billion worth of shares in exchange for 100% of YTO Express.
In addition, Dayang Trands will raise RMB2.3 billion from seven YTO Express shareholders, including Alibaba-controlled Hangzhou Ali Venture Capital. The capital will be used to build distribution centers in China and upgrade its technology.
The reverse takeover proposal is subject to shareholder and regulatory approvals. Upon completion of the deal, Alibaba and Yunfeng Capital will own 11.09% and 6.43% stakes in the listed company, respectively. The founders-led entity will hold a controlling stakes of 64%.
YTO Express was founded in 2000, offering courier services in 34 Chinese cities. It is also one of the 14 logistics partners in Cainiao Network Technology, a logistics network formed by Alibaba in 2013. In April last year, Alibaba and Yunfeng invested RMB250 million in YTO Express, taking stakes of 12% and 8% stakes in the company, respectively.
YTO Express reported a 47% year-on-year increase in revenue to reach RMB12 billion last year, while its net profit was RMB834 million in 2015, representing a 16% increase from 2014.
Last month, China's largest delivery services provider SF Express, which is backed by several PE investors including CITIC Capital, announced plans for an A-share IPO. ZTO Express, another leading Chinese logistics firm, is also reportedly looking to list and has been slated for a $1-2 billion US offering.
In December, Chinese delivery firm Shentong (STO) Express listed on the Shenzhen bourse through a reverse merger with Zhejiang IDC Fluid Control.
Yunfeng Capital, set up by Jack Ma and David Yu, founders of Alibaba and Target Media, reached a final close of around $1.1 billion on its second fund in May 2014.
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