Industrial supermarket e-commerce giant Zhenkunxing plans to go public in the U.S.

When a company reaches a certain scale, it usually considers going public in Hong Kong or the United States. Through going public, the company can achieve equity appreciation, financing, increase visibility, improve employee morale, and attract high-end talents.

Recently, Zhenkunxing, a leading e-commerce company for industrial supplies supermarkets , plans to go public in the United States.

Zhenkun Bank's plan to go public in the U.S. received no objection response

On March 27, after communicating and coordinating with relevant industry regulatory authorities, the China Securities Regulatory Commission issued a no-objection reply to companies such as Zhenkunxing that were planning to go public in the United States.

It is understood that Zhenkun is currently resuming its IPO preparations with China Renaissance Capital and Goldman Sachs, and the fundraising scale may be about US$300 million to US$500 million. As the IPO plan is still under discussion, the fundraising time and scale may still change. However, if the market conditions deteriorate, Zhenkun said it will not go public immediately.

In addition, the China Securities Regulatory Commission also held a video exchange meeting on March 27, and some Chinese concept stock companies and investment institutions attended the meeting and exchanged their views on the recent market. People close to the regulators said that the regulatory agencies of China and the United States are fully aware of each other's concerns and are moving towards each other to strive to find solutions to the problems.

These signs indicate that regulatory authorities are actively implementing the spirit of the special meeting of the Financial Stability and Development Committee of the State Council on March 16, continuing to support qualified companies to go public overseas, and striving to keep overseas listing channels unobstructed.

Who is Zhen Kunxing?

According to the editor, Zhenkunxing's full name is Zhenkunxing Industrial Supermarket (Shanghai) Co., Ltd., which was established in 1998 and is a digital industrial supplies service platform.

Zhenkunxing Industrial Supermarket mainly deals in industrial supplies such as auxiliary materials, consumables, general equipment, spare parts, etc. It currently has 32 advantageous production lines, more than 5 million SKUs, and maintains long-term cooperation with more than 20,000 advanced manufacturing customers.

What is even more gratifying is that at present, Zhenkunxing Industrial Supermarket has built 35 national warehouses and 70 transfer stations, and is working hard to build a delivery network covering the "last mile" across the country.

For industrial supplies procurement, data opacity, high management costs, low enterprise production efficiency and lack of digital tools have always been the pain points of the industry. In response to these long-standing industry problems, Zhenkunxing has launched its unique set of solutions.

Through the "digital procurement and marketing collaborative network", Zhenkunxing provides customers with one-stop industrial supplies procurement and management services, achieving transparency, efficiency and cost reduction in the industrial supplies supply chain. Through "digital management tools and Internet of Things technology", it helps small and medium-sized enterprises quickly complete digital transformation. And through the "digital delivery system", it provides customers with one-stop delivery services for products, services, SaaS and other commodities covering the whole country.

In addition, in order to ensure the company's coordination, unification, efficiency and leanness while developing rapidly, ZKH has built a ZBS management system (ZBS) based on the characteristics of the MRO industry and combined the best practices of distribution, industrial products and e-commerce platforms to suit its own characteristics.

The development and financing history of Zhenkunxing

The success of any enterprise is closely related to its keen market vision, precise market positioning and market strategy. Zhenkunxing is no exception. Let’s take a look at the development history of this enterprise.

When Zhenkunxing was first established in 1998, it mainly engaged in distribution business. At that time, it had obtained the agency rights of many internationally renowned brands of adhesives and lubricants.

In 2008, Zhenkun focused on product development and established the Shenzhen Axis, providing a full range of dispensing technology solutions. In 2016, it was acquired by Mycronic, a leading international company.

In 2014, Zhenkunxing turned its development focus to e-commerce and officially changed its name to "Zhenkunxing Industrial Supermarket (Shanghai) Co., Ltd.". It took adhesives and special lubricant customers as its seed customers and successfully developed its MRO business.

Since 2019, ZKX has been focusing on its platform business. It currently has more than 5,000 employees and a professional sales and technical support team of more than 1,000 people.

In general, the development of Zhenkunxing has gone through the accumulation period, rapid growth period, accelerated development period and the current continuous explosion period. Since its transformation in 2014, Zhenkunxing has relied on its unique bottom-up business model, rich products, professional service team, and intelligent unmanned warehouse solutions to steadily develop and gradually become the leader in the B2B field of industrial supplies.

In terms of financing, Zhenkunxing has received support from many giants, including domestic technology giants such as Tencent and Alibaba.

In June 2019, Zhenkunxing announced that it had received US$160 million in Series D financing, led by Tencent, followed by Eastern Bell Capital, Yuansheng Capital, Legend Capital, and Matrix Partners China. China Renaissance Capital served as the exclusive financial advisor for the Series D financing.

Zhenkunxing's most recent round of financing took place in October 2020. This round of E-round financing was US$315 million, which is the largest single round of financing in the domestic industrial supplies field. This round of financing was led by Yunfeng Capital, a private equity fund founded by Jack Ma and Yu Feng in 2010, and followed by Tiger Fund, Zhongding Capital, Tencent and others.

With improved policies, companies can now list overseas with rules to follow

In December last year , the CSRC studied and drafted the "State Council Provisions on the Administration of Overseas Securities Issuance and Listing of Domestic Enterprises (Draft for Comments)" and simultaneously drafted the "Administrative Measures for the Registration of Overseas Securities Issuance and Listing of Domestic Enterprises (Draft for Comments)" and solicited public opinions.

The Management Regulations mainly provide policy provisions for direct and indirect overseas listing activities of domestic enterprises from the aspects of improving the regulatory system, strengthening regulatory coordination, clarifying legal responsibilities and enhancing institutional inclusiveness.

The CSRC's "Registration Measures" clearly define the scope of application of registration management and related identification standards, clarify the registration subjects and registration procedures, clarify the reporting requirements for major matters, strengthen on-site and post-event supervision, and clarify the registration requirements for overseas securities companies.

The CSRC stated that the country's direction of expanding the opening-up of the capital market will not change, and its attitude of supporting enterprises to go public overseas in accordance with the law and make good use of both resources will not change. The purpose of the regulation is to promote development.

According to the editor, so far this year, before Zhenkunxing, another company , Meihua International Medical Technology Co., Ltd., held its initial public offering in New York.

The CSRC's no-objection response to Zhenkunxing's listing has, to a certain extent, brought good news to companies planning to go public in the U.S. Companies such as Keep, a sports social platform, and Himalaya, a medical technology company, and Linkedin Technology, which previously stopped their U.S. IPO plans for various reasons , may go public in the U.S. again.

For enterprises, when going public, they must strictly abide by laws and regulations and go public legally according to the provisions of relevant departments. Only in this way can they get strong support from relevant departments.

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