Tencent, Alibaba backed Chinese start-ups G7 Connect, E6 Technology merge to create truck management services giant
- The size of China’s road freight market, the world’s largest, was worth 6.2 trillion yuan (US$933.4 billion) in 2020, according to information provider Chyxx.com
- About 80 per cent of the country’s road freight transport capacity is managed by around 700,000 freight managers, according to consultancy BCG
Chinese truck fleet management start-up G7 Connect is merging with rival E6 Technology to create a behemoth with access to 700,000 freight managers in the world’s largest road cargo market.
“Freight managers in China have strong demand for digitising their business through the adoption of enterprise software services and the combination will allow the two companies to invest more in technology and create higher value for customers,” said Zhai Xuehun, co-founder and chief executive of Beijing-based G7 Connect, which is backed by Tencent Holdings.
“Digitalisation in the enormous road freight industry has just begun,” Zhai said in an interview with the South China Morning Post, who has also been named as chairman and CEO of the newly merged group, which will be also known as G7 Connect.
The combined valuation of the merged group was not disclosed. “But G7 was valued at US$2.2 billion before the merger. E6’s valuation was smaller than ours,” said Zhang Jielong, the chief financial officer of the merged entity. “The merger will create synergy between our businesses,” he added.
“The two companies will maintain the same personnel structure and will retain their respective brands and businesses. But a decision-making committee has been established at the group level to coordinate strategy,” said Zhang.
The merger comes as G7 was said to be weighing an initial public offering in Hong Kong of as much as US$500 million, according to Bloomberg.