International

Alibaba-Backed Best Slashes IPO Price Range

Best, the Chinese logistics company backed by Alibaba, has cut the expected price range of its initial public offering (IPO) in the U.S.

According to a report in Reuters, the move happened one day before it launched its IPO in which it expects to offer 45 million American Depository Shares (ADS) to investors. The IPO’s former range was between $13 and $15 per ADS, but Best has now reduced the price to between $10 and $11 per ADS.

The report noted concerns about competition and the rising cost of fuel and labor as factors which prompted investors to react negatively to the initial pricing of the IPO. As such, the company reduced the range, Reuters said. For the six months ending in June, the Chinese logistics company saw a net loss of 623.8 million yuan ($94.9 million USD), the news article read, noting revenue rose 133.5 percent to 8.10 billion yuan.

The growth in revenue was driven by the company’s freight and express delivery units.

Chinese companies, especially FinTechs, are beginning to turn to overseas public offerings to raise new capital. Analysts say the trend is the result of tightened regulations at home, especially those impacting alternative lending startups.

“An increasing number of FinTech IPOs in Hong Kong and the United States are expected to take place,” said Jianbin Gao, a Shanghai-based PricewaterhouseCoopers assurance partner, told the South China Morning Post, according to a Finextra report. “They mainly aim to list in the U.S., though Hong Kong is also an option.”  

China isn’t just instituting tougher rules when it comes to FinTechs. It’s also eyeing the ICO market with concern, recently banning them altogether. TechCrunch reported the Chinese Central Bank said ICOs have “disrupted the economic and financial order.”

The directive, as noted by Chinese financial news site Caixin, was handed down by a committee studying internet-based financial risk, which offered up a list of 60 exchanges that will be inspected. The ICO freeze remains in place until then.

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