Alibaba’s Most Important Logistics Partner Will Go Public Next Week

Alibaba's Most Important Logistics Partner Will Go Public Next Week

Best Inc, which has a market share of 8.6 percent in the Chinese market, is going public on the 20th of September.

Reuters:

Best Inc, a Chinese logistics company backed by Alibaba Group (BABA.N), is launching a U.S. IPO that is seeking about $930 million to fund an expansion of its supply chain network, develop new technology and open more convenience stores. […]

China is the world’s biggest logistics market, with $1.6 trillion in revenue in 2016 and demand for express delivery services seen 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. […]

The IPO is slated to be priced on Sept. 19 and its market debut is set for the following day.

​Alibaba is the largest shareholder in Best. The stronger Best, the better for Alibaba which needs a strong logistics partner to keep competitors like JD.com at bay. The latter is building its own logistics infrastructure.

South China Morning Post (which is owned by Alibaba):

The fundraising plan came after Best, in which Alibaba Group has a 23.4 per cent share, reported sizzling business growth for 30 consecutive months, which could put it in a better position to pit against the five dominant players – SF Express, YTO Express, STO Express, ZTO Express and Yunda Express.

Business Insider on the relationship between Best and Alibaba which makes up 70% of the express business for the former:

Alibaba’s backing helped Best grow to capture 8.6% of China’s express delivery market in the six months leading up to June 2017, up from a 2.7% share in 2012, according to Best. Alibaba is Best’s largest shareholder and client — the e-commerce behemoth made up 70% of Best’s express deliveries from January to March 2017. Cainiao Network, Alibaba’s logistics affiliate that coordinates the vast majority of its e-commerce deliveries, also has a 5% stake in Best.

It is a given that Best Inc will keep pushing its internationalization:

Best intends to use part of the funding to fuel its continued geographic expansion. In addition to its nationwide delivery network in China, the company also has warehouses in Japan, South Korea, Australia, the US, and Germany. Best said that $300 million of the new funding would go to expanding its store network and logistics services, with another $100 million going to technology investments, and the rest set aside for general business purposes. Continuing to grow its footprint overseas could help Best both increase its business with Alibaba, which is also expanding into other parts of Asia, and attract new clients in foreign markets.

After all, someone needs to fulfill all that cross-border e-commerce everyone‘s been buzzing about!

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