ALIBABA-BACKED YTO Express plans to go public via a 17.5 billion yuan (US$2.7 billion) merger with a listed clothing maker, becoming the latest courier seeking capital market funds to stay competitive during China’s e-commerce boom.

    China’s mostly privately held express delivery firms are under pressure to spend heavily on logistics infrastructure and service upgrades to retain market share as tech firms such as Alibaba Group Holding Ltd. propel the country’s fast-growing e-commerce market.

    “The [express delivery] industry has entered a phase of reorganization and upgrading,” said Essence Securities analyst Jiang Ming.

    “Right now, the firms aren’t very different in terms of service standards. So if one wants to make upgrades, differentiate themselves, this will require large investments.”

    Clothing maker Dalian Dayang Trands Co. said yesterday it would buy YTO Express through an asset swap and share issue, resulting in a backdoor listing on the Shanghai Stock Exchange for the courier.

    Dayang Trands said it will transfer its assets to YTO Express’ shareholders under the deal. As a result of the transaction, which will require regulatory approval, the shareholders will ultimately own Dayang Trands, it said. YTO did not reply to requests for comment yesterday.

    YTO’s deal follows that of rival Shentong (STO) Express, which announced a 16.9 billion yuan reverse takeover with a Shenzhen-traded valve maker in December.

    Such backdoor listings are becoming popular due to the lengthy waiting time involved in China’s initial public offering (IPO) process. STO Express is still waiting for regulatory approval and that decision could indicate whether YTO’s deal will go ahead, said analyst Jiang. (SD-Agencies)