With lackluster performance of shares post IPO, offerings from Chinese firms have investors on their guard.
With tepid investor demand, Chinese logistics firm, Best Inc, priced its U.S. initial public offering (IPO) at the bottom of expectations and in the process raised $450 million, against its earlier expectations of $932 million
Best Inc’s IPO was the biggest by a Chinese firm in the U.S. since ZTO Express Inc’s IPO in October 2016, which raised $1.4 billion. Since then ZTO’s stock has traded below its IPO price and is down by 22% from its listing price.
According to sources familiar with the matter at hand, Best priced its 45 million American depository shares (ADS) at $10 each, against expectations of $13 to $15 per ADS. Best had the backing of the Alibaba Group.
Best declined to comment on the IPO pricing.
The revision in the IPO one day before its launch, suggests lackluster investor enthusiasm for its original terms. Further the slump in ZTO’s share price had also factored in at Best’s initial pricing, said a source close to the deal.
Founded by ex-Google executive Johnny Chou, Best faces stiff competition from Chinese logistics firms, including YTO Express, S.F. Holding, and STO Express all of which recently went public in China.
The company had reported a net loss of $94.9 million (623.8 million yuan) for the six months ended June 30. Its revenues however have risen by 133.5% to 8.10 billion yuan, largely driven by its freight and express delivery business.
Alibaba, has a 23.4% stake in the company.