Two logistics companies have pulled off a rare cross-border deal between a mainland China and a Hong Kong start-up, and consolidated two of Chinese tech group Alibaba’s investments in the process. The deal will see Hong Kong’s GoGoVan slot together its operations in the territory, Taiwan and Southeast Asia with 58 Suyun’s business in China. The latter being bigger, will control the combined group.
The duo operate on an asset-light model, much like Uber, allowing customers to hire a fleet of vans for removals and deliveries. Together they say they will create an intra-city logistics and freight online platform worth more than $1bn.
“Everyone knows Tencent and Alibaba are putting a lot of focus on logistics, and we are in the short-distance intra-city business,” said Steven Lam, founder and chief executive of GoGoVan, who will become chief executive of the combined group.
The combined business will be known as 58 Suyun in China and GoGoVan overseas, reflecting the two entities’ geographic franchises. 58 Suyun operates in 100 cities in China, mainly serving consumers, while GoGoVan services businesses in eight cities in China as well as Hong Kong, Taiwan and Southeast Asia.
“As Chinese ecommerce goes overseas, they will need this type of delivery,” said Xiaohua Chen, founder and chief executive of 58 Home. Mr Chen will become chairman of the combined entity, which is eyeing an initial public offering in Hong Kong next year.
58 Suyun was spun out of 58 Home, which is part of US-listed 58.com, a Chinese version of notice board Craigslist that is backed by Tencent, the Chinese social media group. The rump of 58 Home has raised funding from Alibaba, private equity firm KKR and Chinese insurer Ping An, and Alibaba also continues to back 58 Suyun.
GoGoVan counts Alibaba among its early backers. It most recently raised C series funding in June last year; 58 Suyun raised Series A funding at the end of 2015.
As such, the deal brings tech rivals Tencent and Alibaba, each of which have market capitalisations of about $400bn, under the Suyun roof. Previously the two, which compete fiercely in a host of sectors, have been brought together by mergers in food delivery — Meituan-Dianping; and ride hailing — Didi and Kuaidi.
In a further twist, GoGoVan’s China clients include bike sharing companies Ofo and Mobike, whose bikes it picks up from where they are dumped and moves them back into ranks. Ofo is backed by Alibaba and Mobike by Tencent.
