ZTO courier firm delivers year’s biggest IPO in US
Print Edition
CHINESE package delivery company ZTO Express has raised US$1.4 billion in the biggest US initial public offering of the year as its backers cashed in on China’s booming online shopping industry.
The stock market debut on Wednesday, the biggest by a Chinese company since the US$25 billion IPO of e-commerce giant Alibaba Group Holding Ltd in 2014, gave the Shanghai-based company a market value of over 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.
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, 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 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, Hillhouse Capital and venture capital firm 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 US$19.50, above its previously indicated range of US$16.50 to US$18.50 a share.
That price is about 27 times its expected 2017 earnings per share, according to people familiar with the ZTO’s financials.
SF Express, YTO Express, STO Express and Yunda shares trade between 43 and 106 times earnings, according to Haitong Securities estimates.
As concerns grow about a weakening Chinese currency, the New York IPO also gives ZTO more stable US dollar-denominated shares it can use for global acquisitions, said people close to the company.
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