The IPO Buzz: China’s ZKH Group Tops the Mid-December Playlist

ZKH Group Holdings (ZKH proposed) of Shanghai is leading the IPO Calendar this week as the market heads toward its seasonal holiday break, which typically begins on or around Dec. 15^th.  ZKH Group, the Cayman Islands parent of a Chinese MRO platform business, expects to price its $66.0 million IPO on Thursday night, Dec. 14, to start trading Friday, Dec. 15, on the New York Stock Exchange. The company is offering 4.0 million American Depositary Shares (ADS) at $15.50 to $17.50 to raise $66.0 million. Each ADS represents 35 Class A ordinary shares. ZKH Group would have a market cap of about $2.7 billion, if the IPO is priced at the $16.50 mid-point of its price range. Deutsche Bank Securities, China Renaissance and CICC are the joint book-runners. ZKH Group Ltd., founded in 1998, is the parent of a Shanghai-based business that offers MRO procurement services in China. The company provides two platforms – ZKH for enterprise customers and GBB for micro businesses. ZKH Group also offers its platform services through its mobile app, Weixin Mini-Program. “MRO” stands for “maintenance, repair and operation” and refers to materials used for “maintenance, repair and operation purposes that do not directly constitute final products,” the prospectus says. The company’s operating business involves providing a digital procurement network backed by 30 distribution centers, 96 transit warehouses and 4,000 smart vending machines to supply its 64,000 industrial customers with spare parts, chemicals, manufacturing parts, general consumables and office supplies, according to the prospectus. (These figures are as of Sept. 30, 2023.) ZKH Group’s inventory covered 32 product lines, 17.2 million SKUs and 24,000-plus suppliers. The company is not  profitable. It reported a net loss despite revenue of $1.2 billion for the 12 months that ended Sept. 30, 2023, the prospectus shows. Revenue growth also slowed down for the nine months that ended Sept. 30, 2023, compared with the year-earlier period, according to the prospectus.