As predicted by financial experts, the initial public offering (IPO) of Shanghai-based logistics company ZTO Express Inc. raised US$1.4 billion and made its public debut on the New York Stock Exchange, ringing in the biggest IPO of the year.
ZTO’s offering makes it the biggest Chinese company IPO in the U.S. since Alibaba, which made history with its US$25 billion blockbuster IPO in 2014.
Both ZTO and Alibaba have cashed in on the e-commerce boom in China and last year, about three quarters of the 3 billion packages delivered by ZTO were ordered from e-commerce giant Alibaba. According to a regulatory filing, ZTO was founded in 2002 and has gained 14% of the market share in China, according to iResearch Report. In the first half of this year, ZTO earned net income of $115 million on revenue of $639 million.
ZTO chief financial officer James Guo said Thursday that the company was looking to expand further in China, where it has little competition from companies such as UPS and FedEx, and also wants to partner with global logistics firms to gain a presence in the U.S. and other markets.
He said ZTO was in talks with Alibaba rival JD.com about shipping more goods for them, and was having conversations with Amazon as well. "We aspire to be a global logistics company. A U.S. listing for our stock will help us enhance brand awareness with business partners in the West," Guo said.
However, ZTO Express faces fierce competition from other Chinese delivery companies, including STO Express, YTO Express and Yunda Express, which are working on their own IPOs in China. It also considers its reliance on Alibaba to be a risk factor, according to its IPO filing.
China's express delivery market is enormous. Last year, 20.7 billion parcels were delivered across the country, dwarfing the 13.4 billion in the U.S., according to iResearch Report.
Nol van Fenema