Alibaba-backed Best Logistics sets IPO price range for US$932m New York listing

Best Logistics, an Alibaba-backed Chinese delivery firm, plans to offer 62.1 million shares at a price range between US$13 to US$15 apiece in its New York initial public offering, which would make the flotation the biggest among US listings of Chinese companies so far this year.

Hangzhou-based Best Logistics, which will trade under the name of Best Inc. in the US, plans to issue 53.56 million American depositary shares (ADS) and the selling shareholders will offer 8.54 million ADS, according to its filing to the US Securities and Exchange Commission on Thursday morning.

Estimated at between US$807 million to US$932 million in size, the flotation will be the biggest US listing of a Chinese company since last October, when ZTO Express raised US$1.4 billion. It is also the seventh such listing this year.

Best said it will use net proceeds from the offering for continued investments in technology infrastructure and development of additional services and solutions, further expansion in logistics and supply chain service network, and the balance for general corporate purposes.

The biggest shareholder of Best is Alibaba, which holds a 23.4 per cent stake through Alibaba Investment and Cainiao Smart Logistics Investment. Alibaba owns the South China Morning Post.

Shao-ning Johnny Chou, who founded Best in 2007 after leaving Google where he held the position of co-head of China, owns a 14.7 per cent stake.

China is the world’s largest delivery service market. In 2016, total parcel volumes exceeded 30 billion, accounting for more than 40 per cent of the world’s total parcel volumes. Industry revenues reached nearly 400 billion yuan (US$61.32 billion) in 2016, up 44 per cent from the previous year.

Best’s revenues increased 68 per cent year on year in 2016 to 8.8 billion yuan. During the first six months of 2017, revenues rose 134 per cent to 8.1 billion yuan.

A significant portion of its revenues is derived from Alibaba’s e-commerce websites, including Taobao Marketplace and Tmall.

During the first six months of 2017, the volume of Best’s express deliveries generated from merchants on major Alibaba platforms accounted for about 69 per cent of its total express deliveries, Best said in the statement.

However, the company has been posting losses since 2014. In the first half of 2017, losses reached 625 million yuan, compared with 635 million yuan in the same period a year earlier.

According to the filing, each ADS represents one Class A ordinary share, which is entitled to one vote. Each Class B ordinary share is entitled to 15 votes, while each Class C ordinary share is entitled to 30 votes.

Alibaba Investment and Cainiao Smart Logistics Investment will beneficially own all of Class B ordinary shares, which will constitute 24.9 per cent of the total issued and outstanding share capital after the completion of the IPO and 46.2 per cent of the aggregate voting power, according to the company’s statement.

Chou will own all Class C ordinary shares, reflecting 12.4 per cent of total share capital after the IPO and 46 per cent of the voting power.

Other major shareholders in the company include China Harvest Fund II, IDG-Accel China Capital, Shanghai Guangshi Investments Centre, Goldman Sachs entities.

Best plans to trade on the New York Stock Exchange under the ticker symbol BTSI.

Citigroup Global Markets, Credit Suisse Securities (USA), Goldman Sachs (Asia), J.P. Morgan Securities and Deutsche Bank Securities are the joint bookrunners on the deal.