Chi­nese com­pany may make big­gest US IPO ever

China Daily (USA) - - TOP NEWS - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa.com

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.

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