Chinese company may make biggest US IPO ever
A Chinese package-delivery company that gets most of its business from e-commerce giant Alibaba is poised to have the largest US initial stock offering this year.
On Oct 14, Chinese delivery services provider ZTO Express Co submitted a filing for an initial public offering (IPO) on the New York Stock Exchange. ZTO intends to sell about 72.1 million American depositary shares (ADS) later this month at $16.50 to $18.50 each.
If the company sells all available shares at the top price, it could raise as much as $1.5 billion, which would make it the second-largest US IPO by a Chinese company behind the 2014 debut of Alibaba Group Holding Co Ltd that raised about $25 billion.
“Over the past few years, the delivery of consumer goods from e-commerce providers has given rise to an entirely new small package logistics industry in China and in the US. We have changed the way we shop and now we expect very fast deliveries to our doorstep or another convenient location. We have been encouraged to shop this way and we are. The opportunities for logistics companies are almost unlimited,” Rosemary Coates of Blue Silk Consulting in California said.
The Wall Street Journal reported that Shanghai-based ZTO, founded in 2002, produced an operating profit of $223 million in 2015, a 150 percent increase from 2014. Delivering packages for Alibaba accounts for about 75 percent of ZTO’s business, according to the newspaper.
“ZTO’s desire to access capital in the US is a smart move. We no longer see capital as staying in one market or another as the economy is global, interconnected and investors come from everywhere. ZTO’s access to cash will help it take immediate steps toward expansion, so if that capital is available in the US, they should IPO in the US,” added Coates.
ZTO said it will use the proceeds from the offering to buy additional trucks, and expand capacity through the purchase of land, facilities and equipment. Morgan Stanley and Goldman Sachs Group Inc are the lead underwriters for the IPO.
In April, Yintech Investment Holdings Ltd (YIN), the largest online provider of spot commodity trading services in China, priced 7.5 million ADS at $13.50 each on the Nasdaq. At 4 pm on Monday, the shares settled at $18.17.
In June, Beijing-based China Online Education Group (COE), which provides English online training in China, sold 2.4 million American depositary shares at $19 each on the New York Stock Exchange to raise approximately $450 million. At 4 pm, COE closed at $19.47.
Shares of Gridsum Holding Inc (GSUM), which provides data analysis software, had a September debut on the Nasdaq and offered 6.7 million ADS for $13 each. At 4 pm the shares were at $16.42.
Shineco Inc (TYHT), a Chinese producer and distributor of Chinese herbal medicines and organic agricultural produce, had an IPO on the Nasdaq Capital Market in September offering 1.7 million shares at $4.50 each. At 4 pm, the stock was at $5.39.