Best Logistics Seeks to Raise $700 Million Pre-IPO

best logistics

By Matthew Kochen,
Money and Investing Writer

In an effort to expand its operations and pursue target acquisitions, Best Logistics Technologies Ltd. is starting a new round of fundraising with the goal of reaching $700 million before it launching its own initial public offering.

Founded in Hangzhou, China in 2007, Best Logistics offers a wide array of services, including comprehensive supply-chain solutions, freight delivery, inventory management, warehouse fulfillment, express delivery, software development, financing, cloud services, and cross-border logistics consulting.

The parent company to seven other subsidiaries, Best Logistics boasts over 30,000 employees, thousands of certified franchises, and a nationwide distribution network across China, along with office and warehouse presences in Germany and the United States.

Best Logistics serves about 200 companies with several notables like 3M (NYSE: MMM), Philips (NYSE: PHG), Cisco (NASDAQ: CSCO), KFC (NYSE: YUM), and Adidas (ETR: ADS) to name a few.

The company was started by Johnny Chou, the former president of Google China, upon his resignation. Best Logistics handles around 6 million parcels per day, transporting and delivering about 6,400 tons per day on average.

The most intriguing part of Best Logistics is that it is partly owned by Alibaba (NYSE: BABA), the Chinese e-commerce giant.

The preeminent player in China, it is the second largest e-commerce firm in the world behind only Amazon (NASDAQ: AMZN). In their last filing, Alibaba recorded $13.07 billion in revenue and $8.45 billion in gross profit.

The growth in Chinese e-commerce has been outstanding. The top players in the Chinese market, Alibaba and JD.com (NASDAQ: JD), seek to emulate the efficient logistics systems that U.S. retailers like Wal-Mart (NYSE: WMT), FedEx (NYSE:FDX), Costco (NASDAQ: COST), and Amazon possess to minimize delivery costs, processing, and errors.

Even with the recent slowdown of China’s growth, Boston Consulting Group still projects China to sustain the world’s fastest-growing consumer market.

They estimate $6.5 trillion in annual private consumption by 2020, $1.6 trillion of which will come from e-commerce. As a result, investors have continued to funnel money into China’s logistics sector.

It is seen as an attractive investment because it captures the gains from the growth of e-commerce without the risks of a technology startup.

Among those interested in participating in this round of funding is the International Finance Committee, the World Bank’s private sector investment division. They are considering investing $30 million.

Two other Chinese logistics companies are considering launching their own IPO’s this year, e-Shang Warehousing Services Co. and Shanghai YTO Express, the former of which is expected to reach over $1 billion. The time and venue Best Logistics is planning for its own IPO is still unknown.

Best Logistics far from the only player in the market. Alibaba utilizes multiple, elite logistics firms like Cainiao and Shanghai YTO Express (which Alibaba has invested in as well).

The need for more logistics is ever present. Much of China is rural and difficult to deliver to. Delivering ever more goods across a far reach of China continues to be an ongoing struggle seeking solutions.

A version of this article appeared in the Tuesday, January 26th print edition.

Contact Matthew at
matthew.kochen@student.shu.edu

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