JD.com’s logistics team aims to raise $ 3.4 billion in the Hong Kong IPO

JD Logistics, the distribution unit of China’s JD.com trading group, will seek $ 3.4 billion in revenue that would be one of the largest initial public offerings in Hong Kong this year.

The company’s listing decision was due to the rise in online shopping in the coronavirus pandemic. But a a tougher regulatory environment For Chinese technology groups and the recent drop in shares of SF Holding, one of JD Logistics ’biggest competitors, the company’s proposed IPO price has dropped by a quarter, according to a person close to the deal.

JD Logistics will sell 609.2 million shares for HK $ 39.36-HK $ 43.36 ($ 5.07 -5.58 $) each. The final price will be set for Friday and shares are expected to begin trading on May 28, according to an agreement reached by the Financial Times.

The IPO would be the second largest in the city this year KuaishouChina’s viral video app, which grossed $ 5.4 billion in February, would be JD.com’s third blockbuster listing in Hong Kong last year. JD Health, which sells pharmacies and health services online a $ 4 billion subscription and JD.com carried its own second list in the territory last June, which reached a similar amount.

Hong Kong has taken advantage of a flood of top listings made by Chinese technology companies in recent months and has made more than $ 20 billion in IPOs this year, according to Bloomberg data.

JD.com founded logistics and delivery distribution in 2007 and became an independent unit a decade later. The company has 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 is stepping up its study of the largest groups on the Internet. Last month, officials told the country’s 13 largest technology companies, including JD.com, Tencent and ByteDance’s fintech subsidiaries, “Fix significant issues” on their platforms. The push was seen as a sign that the regulatory approach to the sector was expanding beyond Jack Ma’s Ant Group, following the removal of the $ 37 billion IPO from the fintech company last November.

Shares of SF Holding, China’s largest listed company, also fell sharply in the last month after a quarterly loss to investors and an analysis of high valuations made by Chinese companies.

“The competition in China’s logistics space is fierce, especially after that [Indonesian company] J&T Express entered the market, which has affected the performance of other logistics companies and will reach JD, ”said Li Chengdong of Haiti, an ecommerce think-tank group.

JD Logistics was initially the provider of the e-commerce site JD.com, but much of the business comes from transporting packages on behalf of third parties.

IPO core investors JD Logistics, SoftBank technology group Vision Fund, Temasek Holdings, a Singapore-backed investment company and investment companies Tiger Global and Blackstone have subscribed to about $ 1.5 million worth of shares, according to the terms of the deal.

Bank of America, Goldman Sachs and Haitong International are joint sponsors of the list.

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