Quhuo, a Chinese Workforce Provider, Seeks $30 Million IPO in New York

The three founders of Quhuo are former employees of DHL.

Author: Anna Vodopyanova   

Quhuo Ltd., a workforce service provider to consumer businesses in China, seeks a $29.7 million initial public offering in New York.

Operating since 2012, Quhuo aims to fill the opportunity in China's highly fragmented labor market and to provide "flexible, stable and trained" workforce. Today, the Beijing-based company claims to be the largest of its kind in China.

It said, "We provide tech-enabled, end-to-end operational solutions to blue-chip on-demand consumer service businesses in industries with significant e-commerce exposure, including food delivery, ride-hailing, housekeeping and bike-sharing."

Quhuo provides services to some of China's top market players including delivery giant Meituan Dianping (HKEX: 03690), Alibaba's food delivery business Ele.me, China's largest ride-sharing provider Didi Chuxing, and bike-sharing company Mobike.

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In the fourth quarter of 2019, Quhuo said it had 40,800 average monthly active workers on its platform.

For the full last year, the company reported revenue of $295.3 million, at a 39% increase from 2018. It had narrowed its losses 70% year-over-year to $1.9 million, according to the filing.

For the first quarter of 2020, Quhuo reported revenue growth of 12.6% to $56.4 million, though the company said the global outbreak of Covid-19 had slowed its performance. The cost of revenues rose 17.2% to $54.8 million during the quarter, while net loss hit $3.1 million – a 53.5% drop year-over-year.

Notably, Quhuo said it has not experienced material adverse impact to its liquidity and cash flows since the Covid-19 outbreak. It reported $18.7 million in cash as of March 31.

In its latest filing with the U.S. Securities and Exchange Commission, Quhuo said it plans to sell 2.7 million American depositary shares in the price range of between $9 and $11 per share.

Quhuo said one of its existing shareholders, SBCVC Fund IV, L.P., has expressed interest in acquiring $2 million ADSs in the offering.

Underwriters on the deal, Roth Capital Partners LLC, Valuable Capital Ltd., and Tiger Brokers (NZ) Ltd., may purchase an additional 405,000 ADSs of Quhuo upon the IPO.

The funds from the IPO will be used for expansion in various industries, including ride-hailing and housekeeping, as well as for technology improvement, marketing and promotions, working capital, and potential strategic acquisitions.

Quhuo hopes to become publicly traded on the Nasdaq Global Market under the symbol "QH."

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