Delivery firm set to raise up to $1.3 billion in biggest IPO by Chinese company in the U.S. since Alibaba in 2014
A logistics company tied to China’s booming online-shopping industry is set to raise up to $1.3 billion in what could be the biggest U.S. initial public offering this year.
ZTO Express, which delivers parcels for businesses including Chinese e-commerce giants Alibaba Group Holding Ltd. and JD.com Inc., said late Friday it will sell 72.1 million shares at $16.50 to $18.50 each.
At the top end of that range, the Shanghai-based company would raise $1.3 billion. The amount could rise to $1.5 billion if an overallotment option is fully exercised. This would exceed the $1.3 billion total raised by Japanese messaging-app operator Line Corp. in its New York and Tokyo IPO in July.
A listing on the New York Stock Exchange would also make ZTO’s IPO the biggest public market debut of a Chinese company in the U.S. since Alibaba raised $25 billion in the country in 2014.
ZTO is set to launch a global roadshow Monday to sell the deal to investors in the U.S. and Hong Kong.
Founded in 2009 by a 15-year veteran of China’s logistics industry, ZTO operates a fleet of more than 3,300 trucks that deliver across China. Its main business is delivering parcels for Alibaba, which accounted for 75% of its business during the first half of this year. ZTO’s backers include Hillhouse Capital Group and Warburg Pincus LLC.
Bankers working on ZTO’s IPO have been selling the company’s offering as a way for investors to cash in on China’s burgeoning e-commerce industry.
China had $609 billion of online retail sales last year, almost double the $342 billion in the U.S., according to data from iResearch Consulting Group cited in ZTO’s offering prospectus. That figure is expected to surge to $1.5 trillion by 2020, driven by China’s emerging middle class and growing internet and mobile use among consumers, according to iResearch.
ZTO made an operating profit of 1.5 billion yuan ($223 million) in 2015, a 150% increase from 2014. Its operating profit margin in 2015 was 25.1%, up from 15.4% in the previous year.
The company has a 14.3% share of China’s express-delivery market by parcel volume, compared with the 12.4%, 14.7% and 10.5% share held by rivals Shanghai STO Express Co., Shanghai YTO Express (Logistics) Co. and Yunda Ltd. respectively, according to iResearch.
ZTO’s decision to list in the U.S. is partly due to its reluctance to join the queue of more than 800 companies waiting for regulatory approval for IPOs in mainland China, according to a person familiar with the matter.
ZTO said it intends to use most of the proceeds from the offering to buy land, build facilities and purchase equipment to expand its sorting capacity. It plans to use the rest of the money to buy more trucks, invest in information technology and for potential strategic transactions.
Morgan Stanley and Goldman Sachs Group Inc. are lead managers for the IPO. China Renaissance, Citigroup Inc., Credit Suisse Group AG and J.P. Morgan Chase & Co. are also working on the offering.
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