Chinese package delivery company ZTO Express Inc (中通快遞) on Wednesday said it raised US$1.4 billion in the biggest US initial public offering (IPO) of the year as its backers cashed in on China’s booming online-shopping industry.
The stock market debut, the biggest by a Chinese company since the US$25 billion IPO of e-commerce giant Alibaba Group Holding Ltd (阿里巴巴)in 2014, gave the Shanghai-based company a market value of more than US$12 billion.
ZTO’s US listing is a head start over rivals in the world’s largest express delivery market because it gives the company faster access to cash to expand.
Photo: Reuters
The company wants to use US$720 million of its IPO proceeds to buy more trucks, land, facilities and equipment.
Its Chinese competitors SF Express (順豐速運), YTO Express (圓通速遞), STO Express (申通快遞) and Yunda Express (韻達快遞) have all unveiled plans for listings in Shenzhen and Shanghai, but with a backlog of about 800 companies waiting for approval to go public in China and frequent changes to the rules, a New York listing is regarded as a quicker and more reliable way of raising funds and tapping a broader mix of investors.
ZTO’s existing shareholders, including private equity firms Warburg Pincus LLC, Hillhouse Capital Management (高瓴資本管理) and venture capital firm Sequoia Capital (紅杉資本), will also get much more leeway and flexibility to exit their investment under US market rules.
In China, they would be locked in for one to three years after the IPO.
ZTO priced 72.1 million shares at US$19.50 a share, above its previously indicated range of US$16.50 to US$18.50 a share.
That price is about 27 times its expected earnings per share for next year, according to people familiar with the company’s financials.
US rivals, United Parcel Service Inc and FedEx Corp, which are growing at a much slower pace, are trading at multiples of 17.8 and 13.4 times expected next year’s earnings.
As concerns grow about a weakening Chinese currency, the New York IPO also gives the company more stable US dollar-denominated shares it can use for international acquisitions, according to people close to the company.
China’s express delivery firms handled 20.7 billion parcels last year, shifting 1.5 times the volume moved in the US, according to consulting firm iResearch data cited in the ZTO prospectus.
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