HONG KONG: Best, a Chinese logistics company backed by Alibaba Group, is launching a US IPO that is seeking about $930 million to fund an expansion of its supply chain network, develop new technology and open more convenience stores.
The Hangzhou-based company, led by Johnny Chou, a former Greater China president for Google, plans to list on the New York Stock Exchange and the IPO is expected to value Best at up to $5.7 billion.
The company had in June said it aimed to raise up to $750 million from the IPO, but in August it increased the size of the offering, including a greenshoe option, to $1.07 billion, underscoring expectations of strong demand.
China is the world’s biggest logistics market, with $1.6 trillion in revenue in 2016 and demand for express delivery services up 17.9 percent annually in the six years to 2021, Best said, citing forecasts from consulting firm iResearch.
The company’s share of China’s express delivery market grew to 8.6 percent in the six months to June 2017, from 2.7 percent in 2012, Best said.
Existing shareholders include private equity firms CDH Investments, China Renaissance Capital, state-owned Everbright Financial Holding Investment Holding and a unit of Goldman Sachs Group.
CEO Chou is offering 1 million shares, while his brother George Chow, the company’s chief strategy and investment officer, is selling 250,000 shares.
Chou controls Best with a 46 percent voting stake through special shares, while Alibaba has a 37.3 percent voting power and Alibaba affiliate Cainiao Smart Logistics owns 9 percent.
Best follows a number of Chinese logistics companies in going public. They include S.F. Holding, YTO Express and STO Express which listed in Chinese markets, and ZTO Express, which raised $1.4 billion with a New York listing in October.
The IPO is slated to be priced on Sept. 19 and its market debut is set for the following day.
The company plans to use $300 million to expand its convenience stores and its logistics and supply chain services, with another $100 million set aside for technology investments.
The remainder will be used for general corporate purposes and potential acquisitions.
— Reuters
Chinese logistics firm Best, backed by Alibaba, launches $930m US IPO
Chinese logistics firm Best, backed by Alibaba, launches $930m US IPO
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
