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  • Greater China

Deal focus: Freight player G7 eyes public listing

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  • Larissa Ku
  • 23 February 2022
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Having expanded its business scope from hardware into software and financial services, G7 Network is positioning its recent USD 200m PE investment as a pre-IPO round

Fleet management service player G7 Networks is looking to follow suit, though presumably closer to home.

The company, which uses smart devices to track trucks, has raised a USD 200m round led by Trustbridge Partners, and State Development & Investment Corporation (SDIC). Chaos Investment and GLP Capital also participated. Shuai Ren, head of capital markets at G7, described it as a steppingstone to a public listing. She noted that Trustbridge and Chaos have accompanied many start-ups on this journey.

While Manbang operates an app that connects shippers who want to move cargo with truckers who have excess capacity, G7 started out in hardware. Its in-truck devices collect real-time data across a range of metrics related to vehicles, drivers, and cargo.

“We focused on internet of things (IoT) hardware. Without hardware installed in the vehicles, you can't get data; and without data, you cannot build digital systems,” Ren explained. “We then expanded our service boundaries into areas like data infrastructure.”

The smart devices helped freight managers establish vehicle departure and arrival times and pinpoint any unscheduled stops en route. From there, G7 progressed to monitoring cargo, tracking any load changes and whether the temperature was appropriate for cold chain transportation of fresh produce or medical supplies.

The next step involved capturing driver behaviour, for example detecting signs of fatigue as a proactive safety measure. This was achieved using a digital system that ran different data streams through risk analysis models customised for each trip. Drivers would also receive reminders, based on route and load type, to ensure safety and service quality.

Revenue came via a subscription model. The basic GPS location tracking service costs several hundred renminbi per year. For the more sophisticated safety management service – featuring two in-vehicle cameras, one focused on the road and the other on the driver – the annual fee is CNY 2,000 (USD 316).

Four years ago, around the time Hopu Investment led a USD 320m funding round, G7 expanded from fleet management into transaction services such as settlement and insurance. It takes a volume-based commission on each transaction. This now accounts for two-thirds of overall revenue, with subscriptions contributing one-third.

“Prior to 2018, we mainly focused on subscription services. Then we noticed demand for digitalisation sweeping through the industry, especially digital orders whereby the transaction is recorded, traced, and settled online, and the offline element is completely removed,“ Ren said.

G7 has worked with more than 50,000 freight managers since its inception. Most of them are small and medium-sized enterprises (SMEs) that make up 80% of China’s highly fragmented freight transport market.

“SMEs need digital systems to improve their own operational efficiency,” said Ren. “With G7, they no longer need to record orders by hand or in Excel; they no longer need to make post-trip reimbursements to drivers who pay for fuel in cash. When vehicle management and financial management are combined, real business data analysis becomes possible.”

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