The logistics arm of JD.com (Nasdaq: JD; HKEX: 9618) has received the thumbs up from the Stock Exchange of Hong Kong to pursue an IPO that could fetch between $3 billion and $4 billion.
Under the deal, Goldman Sachs, Haitong International, and BofA Securities are the joint sponsors, while UBS is the financial advisor, according to a report by the South China Morning Post.
In the past twelve months, JD.com has been busy with Hong Kong share sales. In June 2020, JD.com raised $4.4 billion in the largest secondary listing of the year. Then, JD Health (HKEX: 06618) conducted the largest IPO of 2020 raising $3.48 billion. It almost had another listing in Shanghai, but its fintech arm JD Technology withdrew the application.
Meanwhile, some recent upscale listings in Hong Kong have failed to gain much traction in their debuts. That included internet giants Bilibili (Nasdaq: BILI; HKEX: 09626) and Baidu (NYSE: BIDU; HKEX: 09888). Both companies completed their listings in March, raising nearly $6 billion, collectively.
“As the third JD.com company to list, JD Logistics will easily get attention due to the well-known brand name,” Kenny Ng Lai-yin, a strategist at Everbright Sun Hung Kai said.
“However, the IPO may come at a time when the stock market is volatile and recent big IPOs did not have a substantial increase [on their first day of trading].”
Established in 2017, JD Logistics operates more than 900 warehouses in China, with an aggregate gross floor area amounting to 21 million square meters. According to JD.com’s annual report, its logistics arm accounted for 5% of its revenues. In total, revenue from logistics and other services hit 40.5 billion yuan in 2020.
In February 2018, JD.com raised $2.5 billion by selling a stake in its logistics unit. The deal included investors Hillhouse Capital, Sequoia China, as well as gaming giant Tencent (OTC: TCEHY; HKEX: 00700)
Following the IPO, JD.com will indirectly control more than 50% of its logistics unit, a February filing showed.