Deal focus: GoGoVan, 58 Suyun seek Asia logistics dominance

The more 58 Suyun and GoGoVan eyed each other, the more each company looked like the missing piece of the other’s puzzle. While both operated in the same broad market – booking delivery vans online through a model similar to Uber – there was little overlap since they targeted different customers and geographies. A merger seemed the obvious step.

“We said, ‘Okay, you have the consumer market – how about if we work together in the B2B market?’” says Steven Lam, founder of GoGoVan. “And the combined company can focus on both Southeast Asia and China, with a leadership position in both markets.”

With the recently announced all-stock merger, for a valuation estimated at more than $1 billion, the companies can now put that hypothesis to the test as Asia’s largest intra-city online logistics platform.

Despite their complementary strategies, the two companies arrived at the market from nearly opposite directions. Lam founded GoGoVan in Hong Kong in 2013 after a previous start-up idea – branded take-away food boxes – faltered due to difficulties arranging transportation.

Seeing an opportunity in the logistics dysfunction, Lam and his co-founders hit on the idea of an app that could connect van drivers directly to business customers without the need of a call center. The start-up has attracted several rounds of investment from backers including Centurion Private Equity and New Horizon Capital, and has expanded into Singapore, Taiwan, South Korea and mainland China.

58 Suyun, by contrast, began in 2014 as a division of 58 Daojia, the online-to-offline local services subsidiary of US-listed classified site 58.com whose investors include Tencent Holdings and Alibaba Group. The company achieved early success with a B2C model focused on China but had begun to target corporate customers that could offer more stable demand – however, this proposal concerned its parent.

“The more it gets to the B2B world, the further away it is from the rest of Daojia's business, which is focused on retail customers,” says Jeremy Choy, head of M&A at China Renaissance, which advised both companies on the deal. “So there was also a strategic decision at Daojia's level that both companies probably shouldn't be under the same roof.”

The merger plays to both companies’ strengths: 58 Suyun can bring its B2C expertise to GoGoVan’s markets in Southeast Asia and Korea, while its partner can implement its B2B service through 58 Suyun’s existing network in mainland China. Lam will serve as CEO of the combined entity, while 58 Daojia founder Xiaohua Chen will be its chairman.

There are a plans for a $200 million funding round following the conclusion of the merger, and the company is reviewing potential investors for their ability to contribute to its expansion plans. “With Tencent and Alibaba already at bat, we are not seeking out big names,” Choy says. “But we do want people who can benefit the company in the long term.”

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• Topics
• Greater China
• Southeast Asia
• Technology
• Support services
• Expansion
• China
• Hong Kong (China)
• Singapore
• Taiwan (China)
• M&A