Full Truck Alliance, a Chinese startup that provides an Uber-like service for the trucking industry, is raising about $1.7 billion to further expand its business ahead of an initial public offering next year, according to people familiar with the matter.
The company, which counts Japan’s SoftBank Group Corp. and Alphabet Inc. among its many high-profile backers, is being valued at $10 billion before the capital raise, the people said. Fidelity International and private-equity firm Permira are among the investors that are planning to take part in the latest funding round, according to one of the people.
Full Truck Alliance, also known as Manbang Group in China, previously raised about $2 billion in early 2018 at a $6 billion valuation. Besides SoftBank and Alphabet, investors in that earlier round included Sequoia Capital China, Tencent Holdings Ltd. and GGV Capital, according to CB Insights. It previously sought to raise more money later that year, but ended up postponing those plans.
The company is based in Guiyang, in China’s Southwestern Guizhou province, and was created in 2017 from a merger of two of China’s largest truck-hailing companies. It runs a mobile app that connects truck drivers to businesses that need to ship goods within the country. Full Truck Alliance currently operates in more than 300 Chinese cities and offers logistics financing, insurance, fuel cards and new-truck sales to its users.
Full Truck Alliance collects an annual membership fee of as much as $250 from some shippers on its platform, and recently started charging a commission for every transaction that it facilitates. The firm also collects financing and other fees.
According to an investor presentation viewed by The Wall Street Journal, the company claims to be the world’s largest road-logistics platform, matching Chinese truckers and businesses on freight transactions valued at roughly $100 billion annually.
In 2019, the company had revenue of more than 2 billion yuan, equivalent to $301.7 million, and booked a net loss of about 700 million yuan, a person familiar with the company said. It expects to turn profitable this year.
Full Truck Alliance’s logistics business was hurt earlier this year when the coronavirus pandemic and government-mandated lockdowns shut down parts of the Chinese economy, but the business has since recovered, according to people familiar with the matter. The latest funding round is likely the last before Full Truck Alliance seeks to go public next year, people familiar with the company’s plans said.
Dozens of Chinese technology startups have listed in the U.S., Hong Kong and mainland China this year, and more are planning to do the same in 2021 to take advantage of buoyant investor demand for stocks of internet and technology companies. They include Kuaishou Technology, an operator of a popular short-video and live streaming platform in China, which last week filed paperwork for a Hong Kong IPO that will likely take place next year.
Chinese companies have raised a total of $107.2 billion in IPOs in the year to date, far exceeding last year’s total and the highest tally in years, according to Dealogic.
Many logistics firms are experiencing strong growth in China this year as the pandemic drives consumers to make more purchases online instead of going to stores, said Ted Chan, the head of Boston Consulting Group’s Asia Pacific transportation and logistics sector.
He added that the industry has been reshaped by technology in recent years, with new companies focusing on warehouse automation, delivery lockers and mobile platforms matching trucks and shippers.
Source: Wall Street Journal