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Alibaba-backed Chinese logistics company Best seeks $932 million U.S. IPO

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(Reuters) — Best, a Chinese logistics company backed by Alibaba, is launching a U.S. IPO that is seeking as much as $932 million to fund an expansion of its logistics and 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 Alphabet’s Google, plans to list on the New York stock exchange and the IPO will be equivalent to 16.4 percent of the firm’s enlarged share capital.

China is the world’s biggest logistics market, notching up $1.6 trillion in annual revenue in 2016, with demand for express delivery services expected to jump 17.9 percent annually in the six years to 2021, Best said, citing forecasts from consulting firm iResearch.

The offering will include an issue of 53.56 million new American Depositary Shares (ADS), each representing one class A ordinary share, in an indicative range of $13 to $15 each, according to a filing with the U.S. Securities and Exchange Commission on Wednesday.

Existing shareholders, including private equity firms CDH Investments, China Renaissance Capital, state-owned Everbright Financial Holding Investment Holding and a unit of Goldman Sachs Group, are selling another 8.54 million ADSs.

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.

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.

Best is offering shares at a 2019 forecast price-to-earnings (P/E) ratio of 17.7–20.4 times, according to a term sheet seen by Reuters, compared with 13.7 times for ZTO.

P/E ratios tend to be higher in China and SF Holding trades at 35.3 times while YTO trades at 21.7 times.

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.

CITIC CLSA, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, KeyBanc Capital Markets, Oppenheimer & Co and Stifel were hired as underwriters.

(Reporting by Elzio Barreto; Editing by Edwina Gibbs)

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