Alibaba-backed Best Inc raises US$450mil in IPO after slashing terms
HONG KONG: Chinese logistics firm Best Inc priced its US initial public offering at the bottom of expectations, raising US$450mil after it revised terms of the deal to cope with tepid investor demand.
Up to US$932mil had originally been expected for the listing, underscoring how some fast-growing companies may have to temper their expected valuations to lure investors burned by recent underperforming IPOs.
The offering was the biggest by a Chinese firm in the United States since rival express delivery firm ZTO Express Inc raised US$1.4bil in October. ZTO’s stock has traded below its IPO price since debuting and is down 22% from the listing price.
Best, which is backed by Alibaba Group, priced 45 million American depository shares (ADS) at US$10 each, the bottom of a US$10 to US$11 indicative range, Thomson Reuters publication IFR said, citing people familiar with the deal.
Best declined to comment on the IPO pricing when contacted by Reuters.
The company had initially expected a price range of US$13 to US$15 per ADS and an IPO consisting of 53.56 million new shares and 8.54 million existing shares.
The revised IPO one day before its market debut suggested weak investor enthusiasm for the original terms. The slump in ZTO’s share price also prompted some investors to balk at Best’s initial pricing, a person close to the deal told Reuters.
Best, founded by former Google executive Johnny Chou, faces stiff competition from Chinese logistics firms such as SF Holding, YTO Express and STO Express, all of which recently went public in China, the world’s biggest logistics market.
Best was banking on China’s booming logistics market to justify its valuation, but concerns over competition, along with rising fuel and labour costs prompted some investors to balk at Best’s initial pricing.
Best reported a net loss of 623.8 million yuan for the six months ended June 30. Total revenue rose 133.5% to 8.10 billion yuan, driven by its freight and express delivery business. Chinese e-commerce company Alibaba, led by Jack Ma, holds a 23.4% stake in Best.