JD Logistics, the delivery unit of Chinese e-commerce group JD.com, will seek to raise up to $ 3.4 billion in what would be one of Hong Kong’s largest initial public offerings this year.
The company’s decision to list follows a boom in online shopping during the coronavirus pandemic. But one harsher regulatory environment for Chinese tech groups and a recent drop in shares of SF Holding, one of JD Logistics’ biggest competitors, lowered the company’s proposed IPO price by about a quarter, according to a person close of the agreement.
JD Logistics will sell 609.2 million shares at HK $ 39.36- HK $ 43.36 ($ 5.07 – $ 5.58) each. The final price will be set on Friday and the shares are expected to start trading on May 28, under the terms of the deal seen by the Financial Times.
The IPO would be the city’s second-largest this year after Kuaishou, a Chinese viral video app, raised $ 5.4 billion in February and is believed to be JD.com’s third best-selling list in Hong Kong last year. JD Health, which sells pharmaceutical and health services online, carried out a $ 4 billion IPO in December and JD.com has made its own secondary registration in the territory last June, which raised a similar amount.
According to Bloomberg data, Hong Kong has benefited from a flood of high-profile announcements from Chinese tech companies in recent months and hosted more than $ 20 billion in IPOs this year.
JD.com established its logistics and delivery arm in 2007 and transformed it into a stand-alone unit a decade later. The company operates more than 900 warehouses in China and provides delivery and warehousing services to third parties.
But the group is among those under pressure as China tightens control over its largest internet groups. Officials last month told 13 of the country’s largest tech companies, including fintech affiliates of JD.com, Tencent and ByteDance “Correct important problems” on their platforms. The surge was seen as a sign that regulatory focus on the industry was extending beyond Jack Ma’s Ant Group, after the fintech company’s $ 37 billion IPO was sabotaged in last november.
Separately, shares of SF Holding, China’s largest listed delivery company, fell sharply last month after a quarterly loss rocked investors and prompted scrutiny of high valuations of Chinese companies.
Major investors in JD Logistics’ IPO including Vision Fund of technology group SoftBank, Temasek Holdings, Singapore state-backed investment firm, and investment firms Tiger Global and Blackstone have subscribed to about $ 1.5 billion worth of shares, under the terms of the deal.
Bank of America, Goldman Sachs and Haitong International are the co-sponsors of the listing.
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