Online road transport operator Shanghai Tiandihui eyes mainland IPO
Shanghai Tiandihui Supply Chain Management, China’s largest online road transport operator, is eyeing an initial public offering after closing the latest round of financing from a clutch of yuan-denominated investment funds.
Xu Shuibo, founder and chief executive of Tiandihui, said the technology start-up would turn profitable in 2018 after four years of operations. That would be a big step towards a mainland listing as the domestic stock exchanges begin scrambling for home-grown unicorns.
“It’s taken time for the mainland market to understand our businesses,” he said. “But the key lies in whether the IPO applicant has convincing operating data. We are making efforts to show investors our growth potential and solid performance.”
Tiandihui raised 500 million yuan (US$79.1 million) in a third round of financing led by CICC Jiacheng Investment Management, a subsidiary of investment bank China International Capital Corp.
The company, whose online platform matches lorries with cargo in more than 50 cities across the mainland, would not disclose its valuation after the financing.
Based on annual revenue of 5 billion yuan in 2017, its valuation could have reached US$1 billion, the threshold for an unlisted technology firm to become a unicorn.
If it were to make a profit this year, it would meet the earnings requirements of mainland securities regulators for an A-share listing.
“We will keep our fundamentals unchanged to chase profits,” Xu said. “More importantly, we want to expand our business scale faster in this untapped market.”
He did not elaborate on the time frame for an IPO.
Tiandihui, dubbed China’s CH Robinson – a US multimodal transport services provider – aims to roll out its operations in 80 mainland cities and double its revenue to 10 billion yuan in 2018, Xu added.
Shanghai and Shenzhen stock exchanges are actively hunting for mainland unicorns as the central government encourages technology firms to raise funds on the domestic equity market.
The move is part of efforts to support a transition of the Chinese economy into a sustainable growth model driven by entrepreneurship and consumer spending.
Tiandihui is among the few large Chinese tech firms that has publicly revealed a clear intention to list on the domestic bourses.
Previously, nearly all Chinese technology companies conducted IPOs in overseas markets such as Hong Kong and New York because their ownership structure and performance were not in compliance with the mainland’s listing rules.
Earlier this month, Foxconn Industrial internet, a unit of the world’s biggest contract manufacturer, received a fast-track approval to launch a 27 billion yuan IPO on the Shanghai exchange just five weeks after it filed its application.
Tiandihui handled transactions worth 118 billion yuan in 2017, nearly double the amount a year earlier.
Road transport makes up 60 per cent of China’s 11 trillion yuan logistics market.
The staggering size of the logistics sector is seen as a drag on the country’s manufacturing industries because they end up footing a huge bill for transport costs.
Aside from expanding its network and investing in new facilities, Xu said the proceeds from the fundraising would also be used to reinforce Tiandihui’s supply-chain finance segment. Tiandihui offers loans to logistics firms operating on its platform to help them upgrade their fleet of trucks and enhance efficiency.