Big-time investors are getting onboard as JD Logistics gears up for a possible $3.4 billion initial public offering (IPO), several news reports said Monday (May 17). The logistics division is an offshoot of Chinese eCommerce behemoth JD.com.
Reuters said Monday the company’s filings show that, at $3.4 billion, it would be one of Hong Kong’s largest share sales this year. JD Logistics is selling 609.1 million shares.
The IPO follows Hong Kong share sales by JD.com and another of its subsidiaries last year, which in total raised nearly $8.5 billion, said Dealogic, which follows the financial markets. The Wall Street Journal reported that JD.com has used the logistics division — which offers speedy delivery — as another sales pitch in China’s eCommerce wars. Alibaba Group Holdings is a top competitor.
JD Logistics stores and delivers groceries, clothes, home appliances and electronic gadgets across China.
Last month, JD Digits said it was setting up a financial holding company to be in line with China’s changing regulatory posture. The country’s new rules have financial technology companies (FinTechs) treated more like banks than in the past.
The new regulatory posture is what led to the collapse of Ant Group’s IPO last year. Ant Group, which made loans to millions of consumers, is a financial offshoot of Alibaba.
For its IPO, JD Logistics has secured seven so-called cornerstone investors, who have committed to buying $1.53 billion of stock. Share prices are still to be determined. These investors, the WSJ reported, include units of SoftBank Group Corp., Temasek Holdings and Blackstone Group.
Stephen Wong, a Hong Kong-based investment manager at Park Capital Group, told the WSJ that he didn’t plan to subscribe to the IPO. He said that, instead of investing in an infrastructure operator such as JD Logistics, he would rather buy stock in companies directly involved in technology and eCommerce.
“JD Logistics’ capital-intensive business model carries high overhead costs, making it less attractive than other high-growth and asset-light technology startups,” he said.
JD Logistics became an independent business in 2017 — and now serves other companies besides its parent firm JD.com. It competes with businesses such as Shenzhen-listed S.F. Holding Co., ZTO Express Cayman Inc. and Alibaba’s logistics arm, Cainiao Network Technology Co., per WSJ.
May 17, 2021 at 07:13PM