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Alibaba-Backed Best Logistics Sets For $1 Billion U.S. IPO

Joseph Lu

Best Logistics Technologies Ltd, a Chinese logistics company backed by Alibaba Group Holding BABA, could be this year's biggest initial public offering from a Chinese company in the U.S. listings.

Founded in 2007 by Johnny Chou, the former co-president of Alphabet’s GOOGL Google China, the shipping company is headquartered in Hangzhou, Alibaba’s hometown. The company offers both domestic and international delivery services to China’s online shoppers.

The company raised $760 million in 2016 with investors like Foxconn, SoftBank China Venture, Fosun International Ltd, The Wall Street Journal reported. Among them, the biggest shareholder is Alibaba, which owns a nearly 30% stake thanks to its $265 million investments, as well as a $165 million investment from its own Cainiao Network. 

Best Logistics operates 400 centers in China, three warehouses in the U.S., and one in Germany. The company also looks to expand in Australia, Japan, and Thailand this year.

China’s logistics industry which supports the country’s large e-commerce market attracts investors from all over the world. ZTO Express Inc. ZTO, a Shanghai-based delivery company, went public last October and raised $1.4 billion. ZTO received backing from Warburg Pincus LLC, a private U.S. firm, and Sequoia Capital China.

Best Logistics is Alibaba's defense strategy against Amazon.com AMZN. The Financial Times reported the U.S.-based e-commerce giant looks to push into China’s $8 billion logistics markets. Wholesalers will be able to use Amazon Logistic+ to ship their products around the globe.

Unlike Amazon, the Chinese e-commerce giant only provides logistic information of logistic providers, warehouses and distribution centers. Alibaba doesn’t have full control of the logistics. Best Logistics will strengthen Chinese e-commerce's shipping infrastructure.

Best Logistics expects to go public in the U.S. later this year and the company plans to raise around $1 billion in the deal.

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