JD.com’s Property and Industrial Units Seek About $1 Billion Each in Hong Kong I
Summary
- Chinese e-commerce giant says it plans to spin off the two businesses through separate listings
JD.com Inc.’s property and industrials units are targeting to raise about $1 billion each in Hong Kong initial public offerings, people familiar with the matter said, adding to the supply of potentially sizable deals that could hit the market this year.
The Chinese e-commerce giant said on Thursday that it is planning to spin off Jingdong Property Inc. and Jingdong Industrials Inc. by listing both companies in the city.
JD.com plans to hold on to about 50% of each company after they are public. Its Nasdaq-listed American depositary receipts jumped 7.8% in Thursday trading to $44.40, while its Hong Kong-listed shares closed 5.4% higher on Friday.
JD.com said it hasn’t finalized the size and structure of the offerings. Both companies have filed preliminary listing documents with Hong Kong’s exchange, which said the spinoffs can proceed.
The two units’ plans to offer shares were disclosed not long after rival e-commerce giant Alibaba Group Holding Ltd. said it would split itself into six independently run companies that could seek separate IPOs.
JD.com has previously spun off other businesses through public listings. They include JD Health International Inc., a telemedicine provider and online pharmacy business that raised $3.5 billion in a Hong Kong initial public offering in late 2020. The other is JD Logistics, which raised more than $3.5 billion when it went public in the city in mid-2021.
JD Property, which started operations in 2007, develops and manages assets such as logistics and business parks, mostly in China. It posted a profit of $323.1 million on revenue of $337.4 million in 2022.
JD Industrials is a supply-chain technology and service provider. The unit, which JD.com started in 2017, generated a loss of $184.7 million on revenue of $2.06 billion last year.
The once-hot global IPO market hit a snag last year as the Russia-Ukraine war, rising interest rates and higher inflation led to market volatility. For Chinese companies, blockbuster listings have been absent since Beijing intensified its crackdown on homegrown technology companies, with the sudden cancellation of financial-technology giant Ant Group Co.’s IPO in 2020 and ride-hailing company Didi Global Inc.’s ill-fated debut in 2021.
Alibaba’s revamp and JD.com’s latest plans follow other recent signs of regulatory easing for the Chinese technology sector, and their units’ stock sales could give a much-needed boost to Hong Kong’s IPO market.
Primary and secondary listings in Hong Kong raised $820 million through the first three months of the year, down 57% from the same quarter a year earlier, according to Dealogic. The market is now holding out hope for Hong Kong IPOs to pick up pace in the second half of the year, deal makers say.
Two new sets of IPO rules came into effect on Friday—which could pave the way for more listings in the Asian financial hub.
Companies in some technology fields that haven’t yet generated revenue will be able to explore listings in Hong Kong, as the city’s stock exchange finalized a new set of rules known as Chapter 18C following a consultation period. Separately, China’s securities regulator last month released long-awaited guidelines that require all mainland Chinese companies that are planning international share sales to inform the regulator beforehand.
JD.com’s planned spinoffs indicate the company “felt it had high chances of fulfilling the regulatory requirements" for their listings, said Steve Chow, an analyst at Agricultural Bank of China International in Hong Kong.
