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Chinese e-commerce firm Baozun raises $110 million in a stock offering

May 22, 2015 12:07 PM
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Shanghai-based Baozun Inc. has raised $110 million in an initial public offering. The company provides e-commerce services to global companies selling to online shoppers in China, including Nike, Phillips and Microsoft.

Baozun on Thursday priced its offering of 11,000,000 shares at $10. The stock is traded on the Nasdaq under the symbol BZUN and opened today at $10.80 per share.

Among the ways Baozun will use the new funds is by developing internal teams to build stronger sales and marketing expertise, says CEO Vincent Qiu. “Second, to invest in IT and fulfillment capability to serve more brands,” he says. Third comes investment in selling, general and administrative needs, followed by exploring potential acquisitions, Qiu adds.

The largest shareholder in Baozun is Alibaba Group Holding Ltd., China’s dominant e-commerce company, which owns a 23.5% stake. Other investors include Japan-based Softbank Corp., U.S.-based Goldman Sachs Group and Israel-based investment firm Infinity Group, according to Baozun. 

The company generates revenue in two ways. In some cases it buys products from brands and sells to consumers directly through online stores under license from those brands. In other cases, Baozun works as a service provider for the brands, which own the inventory and pay Baozun a fixed annual fee and a commission on sales.

Baozun has more than 90 clients, Qiu says. Most are based outside China, but the company is looking to expand its domestic customer base, he says. Baozun also helps clients open web stores on Chinese marketplaces. It has set up more than 100 branded stores on Tmall.com, which is operated by Alibaba, and 10 on JD.com, No. 1 in the Internet Retailer 2015 China 500. Services include website design, development and hosting; IT infrastructure; customer service; warehousing and logistics services; and digital marketing.

The company reported 2014 sales of $255.6 million, up 4.1% from $245.6 million in 2013. Net loss was $9.6 million for Baozun, which launched in 2007.

Morgan Stanley & Co., Credit Suisse Securities and BofA Merrill Lynch were the main underwriters for the stock offering.

 

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