Exits, IPO, Venture Capital

Alibaba-Backed Logistics Firm Best Inc To IPO In U.S.

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Best Inc., the Alibaba-backed Hangzhou-based logistics company also known as Best Logistics Technology Co., has filed for an initial public offering on either the New York Stock Exchange or the Nasdaq Global Market, aiming to raise US$750 million.

The proposed share price and the amount of shares that the company plans to issue were not disclosed, according to a company announcement. Best Inc. is the latest in a string of IPOs by major players in China’s logistics space.

Founded in 2007 by Johnny Chou, former co-president of Google China, Best Logistics has expanded to include seven subsidiary entities, Best Express, Best Freight, Best Supply Chain, Best Cloud, Best Capital, Best Global, and Best Store. As of 2016, the company controlled four million square meters of warehouse and distribution space, tens of thousands of certified franchisees and 660 "multiple operations centers". Outside of China, it has offices and warehouses in the U.S., Germany, Australia, Japan and South Korea.

In 2016, Best Inc. recorded revenue of RMB8.8 billion (US$1.2 billion), up 50% year-on-year, while posting a net loss of RMB1.3 billion (US$198 million). In the first quarter this year, its express service revenue increased by 114.0% to RMB2 billion (US$304 million), and its freight service revenue increased by 137.2%, reaching RMB557 million (US$81 million).

Alibaba Group is the largest shareholder in Best Inc., with a 23.4% stake, while IDG-Accel China Capital and Cainiao Network are the fourth and fifth largest shareholder, with a 6.2% stake and a 5.6% stake respectively.

Last September, the company raised a US$760 million new funding round from CITIC Private Equity, Cainiao, CDH Investments, China Development Bank International Investment Ltd. and Fosun International. Eight months prior, it completed a US$700 million round, with International Finance Corp injecting as much as US$30 million.

Shortly after its founding, Besy Inc received a US$15 million investment from Alibaba and Foxconn Technology Group. Other early investors include China Renaissance Capital Investment, Walden International and IDG Capital Partners, according to the IFC disclosure statement.

This February, China’s largest express delivery firm S.F. Express completed a back-door listing on the Shenzhen Stock Exchange, while rivals YTO Express and STO Express also listed on Chinese markets, and ZTO Express listed in the U.S. last year.


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