Chinese package delivery company ZTO Express raised a whopping $1.4 billion fund on Wednesday through an Initial Public Offering in New York Stock Exchange. This is the biggest IPO in the US market for this year, so far, and also the biggest by a Chinese company since Alibaba's grand IPO debut in 2014.

Like Us on Facebook

The IPO has given ZTO a market capitalization of more than $12 billion. It has also splashed the courier company with huge capital that will most certainly help in faster business expansion.

The company reportedly wants to use $720 million of its IPO proceedings to acquire trucks, land, facilities and equipment.

ZTO priced 72.1 million shares at $19.50 a share, above its previously estimated price range of $16.50 to $18.50 a share. This price is 27 times higher than its expected 2017 earnings per share, according to sources familiar with the firm's financial information.

ZTO's domestic rivals, such as SF Express, YTO Express, STO Express and Yunda Express, have also unveiled plans for listings in Shenzhen and Shanghai stock exchanges. However, Chinese stock markets are often criticized for their constantly changing rules and are considered less reliable for fund raising than the US markets.

Additionally, these companies will have to wait until the backlog of about 800 companies get cleared for an IPO launch in the Chinese market.

The long wait can prove to be a huge detrimental for ZTO rivals.  As for ZTO, it will give a huge head start to the company over its competitors.  

Meanwhile, investors are betting on China's parcel delivery industry, especially because the market is still underpenetrated.  Buoyed by the growth in E-commerce industry, the Chinese parcel companies are experiencing unprecedented boom in their business.

Based on the information cited in ZTO's prospectus, China's delivery firms delivered 20.7 billion parcels in 2015. This is far below than what US companies delivered in the same period, but experts noted that the gap actually represents a huge opportunity for growth for the Chinese parcel delivery industry.   

TagsZTO Express, ZTO's IPO, ZTO China, china, Chinese Parcel Delivery Industry