Logistics major Global Logistic Properties (GLP) has led an RMB230-million ($36 million) Series B funding round in Songxiaocai, a business-to-business (B2B) platform which offers agricultural wholesale services to Chinese retailers, according to a statement.
The funding round was also joined by IDG Capital, Matrix China Partners, and Puhua Capital. Songxiaocai provides vegetable purchase, delivery and after-sales service for retailers.
GLP currently owns and manages assets estimated at $43 billion, making it one of the largest logistics players worldwide. Its investment in Songxiaocai is motivated by the increased protein demand and formalisation of China’s food system, which buoys investments in developing cold chain facilities (i.e. refrigerated storage and transportation), given increasing consumer and government expectations for food quality and safety.
Described as the first tranche of a Series B round, proceeds from this latest financing round for Songxiaocai will finance the addition of more product verticals, product development, talent acquisition and other business development efforts.
The investment by GLP follows its delisting from the Singapore Exchange (SGX) on Monday, 21 January, in a privatisation process that saw it bought out for S$16 billion – the largest private equity (PE) buyout deal in Asia for 2017 – by a consortium consisting of Hopu Investment Management, Hillhouse Capital Group, Vanke Group and the Bank of China Group Investment, as well as senior management.
China’s e-commerce market is expected to continue to mature as its 4G mobile network penetration is forecast to expand to more than 60 per cent of the population.
Since 2015, China’s agricultural sector has transferred from the high-growth gold age (2004-2014) to the medium and low-speed growth stage with in-depth adjustment. A McKinsey report, “Global agriculture’s many opportunities”, notes that with annual spending of $300 billion, China is the world’s largest consumer of meat. Annual growth of 3 to 4 per cent a year is predicted, driven by the increasing demand from China’s growing middle class.