GoGoX, Kuaigou Dache operator files for Hong Kong IPO

58 Freight operates in more than 340 cities in mainland China, Hong Kong, Singapore, Korea and India
Company posted a net loss of US$39 million in 2020, after recording net losses in 2018 and 2019

Banking & finance

Chad Bray

Published: 11:31pm, 27 Aug 2021

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58 Freight, the loss-making operator of Kuaigou Dache in China and GoGoX in Hong Kong and other parts of Asia, filed to go public in Hong Kong on Friday, the latest Asian logistics carrier to seek to tap the capital markets this year.

The Beijing-based company did not specify a timetable for the offering or indicate how much it intends to raise in its initial public offering in regulatory filing on Friday.

The filing comes as its Hong Kong logistics rival Lalamove is considering shifting its planned US$1 billion IPO to Hong Kong from the United States against the backdrop of a regulatory crackdown on the tech sector in China, which has cast a pall on overseas listings.

The heightened scrutiny by Beijing has spooked investors in the US and prompted a number of firms to delay or reconsider listings in light of the uncertain regulatory environment.

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As part of its risk factors, 58 Freight warned that it collects and processes a large amount of data, which is subject to “complex and evolving” regulations and oversight.

“For example, recent legal developments in mainland China have created compliance uncertainty regarding certain transfers of personal information and other data,” the company said.

The company said it plans to used the proceeds of the IPO to enlarge its user base and strengthen its brand awareness, as well as develop new services and products.

Several logistics firms have gone public this year as social distancing measures implemented during the coronavirus pandemic increased e-commerce demand.

Steven Lam Hoi-yuen, the co-founder of GoGoVan. Photo: Edward Wong

JD Logistics, a unit of Chinese e-commerce giant JD.com, raised US$3.2 billion in its IPO in Hong Kong in May, with its shares attracting a lower-than-expected premium on its first day of trading.

Full Truck Alliance, a Chinese service for freight shipping similar to Uber Technologies and known as Manbang in China, raised US$1.6 billion in its IPO in June. However, its US listing has drawn scrutiny from Chinese regulators.

58 Freight was formed by the merger of the freight business of Chinese online classifieds giant 58 Daojia and the then-GoGoVan in 2017. 58 Daojia currently owns 51.2 per cent of the combined company.

The company recorded a net loss of 252.8 million yuan (US$39 million) in 2020, after recording net losses in 2018 and 2019. It reported a 3.3 per cent decline in revenue to 530.4 million yuan in 2020 as the coronavirus pandemic weighed on shipper activities and intensified competition in the online intracity logistics market in China.

58 Freight operates in more than 340 cities in mainland China, Hong Kong, Singapore, Korea and India. It was the second largest online intracity logistics platform in the mainland and market leader in Hong Kong in terms of gross transaction volume last year, according to market researcher Frost & Sullivan.

As of April 30, the company had about 24.8 million registered shippers and 4.5 million registered drivers.

China International Capital Corp, UBS, Bocom International and ABC International are acting as sponsors on the offering.

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