Best Inc. (NYSE: BSTI) entered the market with a bang on Wednesday. This Chinese logistics firm is backed by Alibaba Group Holding Ltd. (NYSE: BABA) and is the largest IPO by a Chinese firm in the United States since ZTO Express, which raised $1.4 billion in October 2016.
The firm priced its 45.0 million American depositary shares (ADSs) at $10 apiece, with an overallotment option for an additional 6.75 million. At this price, the entire offering is valued up to $517.5 million. Each ADS represents one Class A ordinary share.
To hold up this massive valuation, Best is more or less betting on China’s rapidly expanding logistics market. Although, there are concerns about growing competition as well from other Chinese firms.
The underwriters for this offering are Citigroup, Credit Suisse, Goldman Sachs, JPMorgan, Deutsche Bank, CITIC CLSA, KeyBanc Capital Markets, Oppenheimer and Stifel.
Best is a leading and fastest-growing smart supply chain service provider in China. Its multisided platform combines technology, integrated logistics and supply chain services, last-mile services and value-added services. Best Cloud, its proprietary technology platform, is the backbone that powers integrated services and solutions.
In a recent filing, the company said:
Our total revenue increased by 71.5% from RMB3,065.8 million in 2014 to RMB5,256.3 million in 2015, and further increased by 68.3% to RMB8,844.1 million (US$1,304.6 million) in 2016. Our total revenue increased by 133.5% from RMB3,470.1 million in the six months ended June 30, 2016 to RMB8,104.1 million (US$1,195.4 million) in the same period in 2017. … We had net losses of RMB718.5 million, RMB1,059.4 million and RMB1,363.5 million (US$201.1 million) in 2014, 2015 and 2016, respectively, and RMB634.8 million and RMB624.6 million (US$92.1 million) in the six months ended June 30, 2016 and 2017, respectively.
Shares of Best were last seen up 14.6% at $11.46, with a range of $11.10 to $11.89 on the day. Just after noon Eastern, about 17 million shares had moved on the day.
Alibaba shares were down 0.6% at $178.94, with a consensus price target of $195.38 and a 52-week range of $86.01 to $180.87.