(Adds industry context, background)
SHANGHAI, Oct 23 (Reuters) - Chinese express parcel delivery firm Shentong (STO) Express is planning a ‘back-door’ listing through a deal that would see it take over a publicly traded firm in Shenzhen, a company executive told Reuters on Friday, offering investors a rare chance to get a slice of the fast-growing sector.
STO Express, which says it delivers one in six parcels in China, will pursue the listing through valve maker Zhejiang IDC Fluid Control Co Ltd. IDC, whose shares have been suspended since August pending restructuring, said earlier this week the two firms were in talks for a shares-for-assets deal.
The deal would give STO a listed shell, bypassing China’s lengthy initial public offering (IPO) process and likely making it the first of its peers to go public. This would allow investors to buy into the fast-growing logistics sector being driven by China’s booming e-commerce market, led by giant Alibaba Group Holding Ltd.
“We’ve been planning this for many years,” an executive in STO’s marketing department told Reuters. The executive, who said she was authorized to discuss the plan but declined to give her name, confirmed the deal would entail a back-door listing.
She declined to comment on financial terms. IDC’s market value is about $716 million, according to the price of its suspended shares.
The express delivery sector grew around 50 percent each year between 2010-2014 and handled 14 billion parcels last year, State Post Bureau data show. But, it has remained elusive for investors due to the dominance of private and state-owned firms.
“We want to improve our governance and services, to build up the STO Express brand,” she added. “China’s express delivery companies do not currently have the same standards as overseas firms, the listing will be conducive to this.”
Shanghai-based STO has over 10,000 service points and employs around 300,000 workers, according to its website. Last year, it launched its first overseas logistics hub in Japan.
State-owned China Postal Express & Logistics Co, which bills itself the country’s biggest courier, canceled a planned initial IPO in 2013 amid a lengthy suspension of market listings by regulators.
In May, Alibaba took a minority stake in rival firm YTO Express for an undisclosed amount. Two years ago, Shenzhen-based S.F. Express sold a 25 percent stake to CITIC Capital, China Merchants Group and Orzia Holdings. (Reporting by Brenda Goh and Adam Jourdan; Editing by Kenneth Maxwell)