HONG KONG (Reuters) – New York-listed Greatest Inc, a Chinese language logistics agency backed by e-commerce large Alibaba Group Holding Ltd, is contemplating a sale as a part of a strategic evaluate, six individuals with data of the matter stated.
With the endorsement of Alibaba, its greatest shareholder, Greatest has tapped monetary advisers to discover choices as its shares have been underperforming and are worth a fifth of its IPO price in 2018, two of the individuals concerned within the discussions stated.
Billionaire Jack Ma’s Alibaba, which owns 33% of the agency, in addition to Greatest founder and CEO Johnny Chou, who has a 11% stake on a completely diluted foundation, may each find yourself promoting their stakes, 5 of the individuals stated.
Greatest’s stock was up 8.8% in morning commerce in New York on Wednesday, after having jumped as a lot as 14.6% earlier within the session.
No formal sale course of has been launched, and the corporate and Alibaba haven’t determined which choice to take because the strategic evaluate continues to be underway, cautioned the people, together with two who have been approached a few sale.
The individuals declined to be named as the knowledge is confidential.
A Greatest spokeswoman denied {that a} sale was into account. She stated Chou continued to consider within the “bright future and long-term value” of the corporate’s built-in sensible provide chain and logistics options, and had no plan to promote his stake.
The corporate, which has a market value of $790 million, didn’t touch upon different points together with whether or not it was conducting a enterprise evaluate.
Alibaba stated in an emailed assertion the knowledge was incorrect, however didn’t elaborate.
The Greatest discussions are taking place in opposition to the backdrop of a regulatory crackdown by Chinese language authorities on Ma’s enterprise empire together with an anti-trust probe of Alibaba and sharpening scrutiny of its monetary affiliate Ant Group.
Reuters was unable to find out whether or not the potential sale is linked to the probe.
The e-commerce group began contemplating a stake divestment late final 12 months after it discovered it tough to combine Greatest with different logistics firms underneath its portfolio, two of the individuals concerned within the discussions instructed Reuters.
Greatest tapped advisers to counsel strategic choices in the direction of the top of 2020, and so they have approached a variety of patrons together with home supply main S.F. Holding Co Ltd and personal fairness companies for the sale of the stakes, they stated.
One of many potential patrons stated his agency had acquired what he described as a deal “teaser” a few sale of shares by Greatest in the direction of the top of final 12 months and later about fundraising for one in every of its items.
S.F. didn’t reply to a request for remark.
Different choices the corporate is contemplating embody fundraising for its freight supply unit, three of the sources stated. Greatest may additionally promote its finance leasing enterprise, one stated.
The deal, if launched and accomplished, will add to a logistics sector consolidation in China. Reuters reported in December retailer JD.com and Carlyle, amongst others, are bidding for South Korean CJ Group’s China logistics enterprise.
Greatest was based in 2007 by former Google government Chou and debuted in New York in 2017. With a 12% share of the Chinese language express supply market in 2019, it’s one in every of a number of couriers that work with Alibaba’s logistics division Cainiao.
The corporate’s shares fell almost 70% over the previous 12 months, as of Tuesday’s shut, as its earnings have been hit arduous by the fallout from the COVID-19 pandemic. As compared, the S&P/BNY Mellon China Choose ADR Index, which tracks Chinese language companies listed in New York, has gained 45% over the identical interval.
Reuters reported in August that Greatest was looking for a Hong Kong itemizing for its express supply and freight supply companies, eager to spice up its valuation and set up an investor base nearer to China.
However the itemizing prospects have been dented by its falling stock price and weak quarterly outcomes, stated the 2 individuals cited earlier.
Reporting by Julie Zhu and Kane Wu; Modifying by Sumeet Chatterjee, Carmel Crimmins and Ramakrishnan M.
