China’s JD Logistics plans to boost $ 3.2 billion within the Hong Kong IPO

Employees at Chinese e-commerce giant JD.com prepare packages for delivery at the company’s main logistics center for Singles Day on November 11, 2020 in Beijing, China.

Kevin Frayer | Getty Images News | Getty Images

GUANGZHOU, China – The logistics arm of Chinese e-commerce giant JD.com will value its Hong Kong IPO at $ 40.36, near the low end of the range, a knowledgeable person told CNBC.

JD Logistics previously announced that its initial public offering on the Hong Kong Stock Exchange would range between Hong Kong dollars 39.36 and Hong Kong dollars 43.36.

The company will issue 609.2 million shares. For every $ 40.36 Hong Kong, the company would raise Hong Kong $ 24.6 billion ($ 3.2 billion).

Pricing is in need of confirmation, said the person who refused to be identified because they were not allowed to speak publicly.

JD declined to comment when contacted by CNBC.

JD.com, a rival of Alibaba in China, has been busy in the capital markets. JD.com, which is listed in the US, had a secondary listing of $ 3.87 billion in Hong Kong last June. In December, the company listed its Hong Kong health unit.

However, JD withdrew its planned listing of its financial technology arm JD Technology from the NASdaq-style STAR market in Shanghai last month.

JD has invested in its logistics to differentiate itself in the Chinese e-commerce market. The company has focused on same and next day deliveries and has invested in automated logistics warehouses.

In 2020, JD Logistics posted sales of 73.4 billion yuan ($ 11.4 billion), up 47% over the previous year. However, the company posted a loss of 4 billion yuan in 2020, up from 2.2 billion a year earlier.

Additionally, in 2020, more than 50% of JD Logistics’ sales came from JD Group and other affiliates – a risk the company identified in its IPO prospectus.

“A significant portion of our sales were associated with JD Group during the track record period and we anticipate that a significant portion of our sales will continue to be associated with JD Group for the foreseeable future,” it said.

“We may have different development prospects or conflicts of interest with the JD Group and, due to the JD Group’s majority stake in our company, we may not be able to resolve such conflicts on terms that are favorable to us.”

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