BEIJING, February 17 (TMTPOST) – JD Logistics Inc. has filed an IPO prospectus to Hong Kong Sock Exchange, potentially raking in billions of dollars to leverage a strong post-Covid-19 online shopping momentum.
The imminent IPO will be a milestone for China’s e-commerce giant JD Technology Group Corp., after the listing of its two other associates, JD.com and Jingdong Health.
Jingdong Technology holds 79% of JD Logistics prior to the IPO, while Jingdong E-Commerce (Express) LLC holds another 7.9%. The remaining shares are held by a total of 16 companies, according to the prospectus.
The listing could raise about US$5 billion, giving the shipping firm a valuation of about $40 billion, according to people familiar with the matter. The IPO news on Tuesday night Beijing time sent JD.com’s shares soaring to a record high on HKEx on Wednesday and on Nasdaq on Tuesday (closed at US$103.43 compared with its IPO price of US$19 in May 2014).
BofA Securities Inc., Goldman Sachs Group Inc. and Haitong International Capital are the joint sponsors of the proposed IPO, according to the prospectus.
Still in Red
Despite a potentially high market valuation, the logistics company has been reporting a net loss since its inception in 2007 although the loss is decreasing quickly.
Relations with JD.com
In 2007, JD.com’s founder and CEO Qiangdong Liu proposed to build its own shipping and delivery leg by investing in US$10 million he just raised. Most of JD.com’s investors were opposed to the idea. A logistics firm was a huge financial burden to an Internet company, they argued.
In order to convince the investors, Liu put forward a budget of US$1 billion. The investors thought an in-house logistics arm was just a money-burning business unit and would drag the e-commerce firm to a collapse.
However, Liu thought that the in-house shipping unit, although expensive, would boost the core competitiveness of the e-commerce business and improve user experience for online shoppers. There was a turnaround in 2010 when Liu met Zhang Lei, CEO of Hillhouse Capital, who offered an investment of US$300 million, much higher than what Liu originally asked for – US$75 million.
The shipping and delivery unit become a standalone company in 2017 and received a flush of US$2.5 billion from Hillhouse, Sequoia China, China Merchants Group, Tencent, China Life, etc. in February 2018.
As of September 30, 2020, JD Logistics had over 800 warehouses across China, with a total storage area of over 20 million square meters. Among the warehouses, there are 28 large smart logistics centers.
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