Top China logistics firm eyes USD 2 bln IPO

China Post Logistics plans to raise over USD 2 billion in a Hong Kong and Shanghai stock market listing in 2008, sources said, amid mounting foreign competition in the booming sector.
The company, run by the state operator of the country’s huge postal system, is expected to raise at least USD 2 billion in total on both markets, though it was too early to tell how much it could rake in eventually, one of the sources familiar with the deal told Reuters.
“We do have a listing plan, but now we don’t have any timetable, maybe next year or later,” a China Post Logistics spokesman said. He declined further comment.
The state-owned logistics firm — established in 2003 with a 370 million yuan (USD 50 million) capital base — is set to balloon in size. Its parent has embarked on a plan to merge the firm with its own nationwide express mail service.
The spokesman said any listing timetable should depend on the progress of the merger, which is expected to finish in 2008.
Robust economic growth and surging foreign trade is propping up growth in China’s sprawling transportation and logistics industry.
The country’s logistics sector chalked up turnover of 53.7 trillion yuan in the first three quarters of 2007, up 25.5 percent, according to the China Logistics Information Centre.
But competition for local firms is intensifying and China allows global players, such as FedEx (FDX.N: Quote, Profile, Research), United Parcel Service (UPS.N: Quote, Profile, Research) and Deutsche Post’s (DPWGn.DE: Quote, Profile, Research) DHL [DHL.UL], to speed up expansion and operate wholly owned subsidiaries.
FedEx and its rivals are focusing on Asia and China in particular as they look for growth beyond mature markets.
FedEx has committed to building an air hub in the southern city of Guangzhou, while UPS is building one in Shanghai.
DHL Express is investing USD 110 million to double the size of a facility at Hong Kong’s international airport, and also plans to build a USD 175 million air hub in Shanghai to strengthen its foothold in the fast-growing market.
But they are relative newcomers to a Chinese express delivery market that for years had been closely guarded by China Post.
China Post Logistics operates 31 provincial subsidiaries, engaged in everything from storage and distribution to procurement and transportation. (US$1=HK$7.8=7.3755 yuan)