Zhonggu Logistics, an affiliate of China’s largest domestic liner operator Zhonggu Shipping Group, plans to raise CNY1.5 billion (US$214 million) through an IPO of its shares on the Shanghai Stock Exchange.
The China Securities Regulatory Commission approved Zhonggu Logistics’ IPO application on 23 July 2020. Chinese investment bank China International Capital Corporation is underwriting the share issuance.
Previously listed on Chinese over-the-counter bourse National Equities Exchange and Quotations, Zhonggu Logistics voluntarily delisted itself from this bourse and announced its IPO plans in May 2019.
The date for the IPO remains undisclosed, but Zhonggu Logistics’ listing prospectus stated that the IPO plans to raise CNY1.5 billion, of which CNY1.35 billion will help to fund containers and CNY153 million will help to finance vessel acquisitions from finance raised in the IPO. In total Zhonggu Logistics plans to spend CNY2.4 billion (part funded by the IPO proceeds) on acquiring ships and containers. Expenditure for containers is estimated at CNY 1.38 billion and total spending on ship acquisitions is estimated at CNY1.02 billion (US$144.9 million).
Zhonggu Logistics, which offers services in freight forwarding, multimodal transportation and cold chain transportation, will issue 81.9 million shares that represent not more than 10% of its total stocks, leaving majority control with Zhonggu Group chairman Lu Zongjun.
Lu owns 499 million shares in Zhonggu Logistics through entities he controls, such as Zhonggu Group, Guyang Investment, and Guze Investment, amounting to a 83.13% interest in Zhonggu Logistics. Zhonggu Group alone holds 70.15% of Zhonggu Logistics’ shares.
In 2019, Zhonggu Logistics recorded revenue of CNY9.9 billion (US$1.42 billion) and net profit of CNY858 million (US$122.75 million), equating to year-on-year growth of 23% and 56%, respectively. As at 31 December 2019, the company had total assets of CNY8.31 billion (US$1.19 billion) and total liabilities of CNY5.34 billion (US$763.9 million).
Martina Li
Asia Correspondent
