As investors pour money into China’s logistics and warehousing companies, which are critical to the country’s booming eCommerce infrastructure, one business has its sights set on raising $700 million before impeding plans to go public.
Best Logistics, partly owned by Alibaba Group Holding, disclosed its funding intentions ahead of its IPO in a disclosure statement by the International Finance Corporation, the private sector investment arm of World Bank, The Wall Street Journal reported late last week.
While the exact timeline for Best Logistics’ IPO is still undetermined, WSJ explained that the disclosure statement confirmed the company will use the new capital to assist with pursuing expansion and acquisition activities.
In China, the rapid growth of the eCommerce market is forcing online merchants to work closely with logistics companies to quickly build up warehouse and delivery infrastructure in order to keep up with consumers’ demand for products.
Earlier last year, Alibaba announced its investment in Shanghai YTO Express, one of China’s top logistics companies, to help Alibaba increase its operational efficiencies, while working with the company to develop its solutions across China. Delivery logistics across the region have been a struggle for many eCommerce companies as the postal delivery in China has lagged.
According to Alibaba, YTO Express will work with Cainiao, the logistics affiliate of Alibaba Group, to “enhance the industry’s logistics management capabilities and international and rural delivery services,” which is one of the areas the delivery issues have impacted most.
Investing in logistics has the potential to help the company strengthen its own eCommerce footprint, as improvements across China’s logistical industry should have a trickle-down impact on the companies, like Alibaba, that are trying to deliver a massive amount of goods across greater China, including rural areas that have sometimes been a struggle to deliver to.