Courier ZTO delivers year’s biggest US IPO, raising $ 1.4b

Chinese package delivery company ZTO Express said it raised $ 1.4 billion on Wednesday in the biggest US 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 $ 25 billion IPO of ecommerce giant Alibaba Group Holding in 2014, gave the Shanghai- based company a market value of more than $ 12 billion.

The US listing will help ZTO gain a head start over rivals in the world’s largest express delivery market by providing faster access to cash to expand.

The company wants to use $ 720 million of its IPO proceeds to buy more trucks, land, facilities and equipment.

Domestic competitors SF Express, YTO Express, STO Express and Yunda Express have all unveiled plans for listings in Shenzhen and Shanghai, but with a backlog of about 800 companies waiting for IPO approval in China and frequent rule changes, a New York listing is regarded as a quicker and more reliable way of raising funds.

ZTO’s existing shareholders, including Warburg Pincus, Hillhouse Capital and Sequoia Capital, 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 $ 19.50 a share, above its previously indicated range of $ 16.50 to $ 18.50 a share.

That price is about 27 times its expected 2017 earnings per share.