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May 17, 2021updated 18 May 2021 9:00am

Your IPO is out for delivery: JD Logistics readies for $3.4bn Hong Kong debut

By Elles Houweling

JD Logistics, the delivery arm of Chinese ecommerce giant JD.com, is planning to float on the Hong Kong Stock Exchange (HKEX). The company seeks to raise as much as 26.4bn Hong Kong dollars ($3.4bn) in what is set to be the city’s largest public listing since the beginning of 2021.

The warehousing and shipping company plans to sell 609.2 million shares priced between HKD39.36 and HKD43.36 apiece, reports the South China Morning Post. The company will start taking investor orders from Monday and trading is set to begin on May 28.

Eight cornerstone investors have committed to buy a total of $1.5bn worth of JD Logistics shares, which would account for about 39% of its global offering if the deal is priced at the top end.

The primary investors include Softbank, Singaporean sovereign wealth fund Temasek Holdings, Blackstone Group, Tiger Global, China Chengtong Holdings, Matthews Asia and Oaktree Capital. BofA Securities, Goldman Sachs, and Haitong International Securities are the joint sponsors for the listing.

JD Logistics’ initial public offering (IPO) is expected to be the second multibillion-dollar HKEX debut this year, after Tencent-backed short video platform Kuaishou Technology’s listing earlier this year. According to GlobalData’s deals database, the Beijing-based video platform raised HKD42bn in January, making it the biggest IPO globally so far this year.

Set up in 2007 as a standalone unit under JD.com, JD Logistics operates as the supply chain and logistics services for the ecommerce platform. JD Logistics’ main selling point is its same- or next-day delivery supported by its many warehouses across the country, which keep products close to end consumers.

According to GlobalData, JD Logistics operates more than 900 warehouses with cross border, cold chain delivery, frozen and chilled warehousing facilities, B2B and crowdsourcing logistics.

A report by the consultancy China Insights predicts that the market size of China’s supply chain and logistics service industry will reach 3.19tn Chinese yuan ($495bn) by 2025, with a five-year annual growth rate of 9.5%.
Given these numbers, JD Logistics aspires to build an integrated logistics platform in China comparable to the joint forces of Amazon logistics plus UPS in China, 36Kr reports.

JD.com is one of China’s largest online retailers and a primary rival to the ecommerce behemoth Alibaba. However, unlike Alibaba – which relies heavily on third-party partners to fulfil orders – JD.com has its own warehouse network and an army of courier staff similar to Amazon.

Due to soaring demand in online retail during the pandemic, JD.com reported better than expected results last year. According to GlobalData’s company database, the Beijing-headquartered company showed revenues of 745m Chinese yuan ($116m) in the fiscal year ended December 2020, an increase of 29.3% compared to 2019. The ecommerce platform listed on the Nasdaq in 2014 under the ticker symbol JD.