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IPO

JD.com logistics unit on track to deliver $4bn Hong Kong IPO

Exchange listings committee paves way for company to meet potential investors

JD Logistics is said to be eyeing a valuation of about $40 billion in its IPO.   © Reuters

HONG KONG -- Plans by the logistics unit of Chinese e-commerce platform JD.com for a $4 billion initial public offering have secured the Hong Kong Stock Exchange's approval, according to two people familiar with its efforts.

JD Logistics, which offers supply-chain services from warehousing to distribution, is eyeing a valuation of about $40 billion, the people said. The company got the nod from the Hong Kong bourse's listing committee on Thursday and will start preliminary investor meetings next week.

It would become the third group company with shares traded in the city. Nasdaq-listed JD.com, its parent, raised $4.5 billion in June via a secondary listing while JD Health raised $3.9 billion in December in an IPO.

The offering by JD Logistics is one of the most anticipated in Hong Kong this year and could boost the city's IPO market, which has shown signs of fatigue after the strongest start to a year ever.

Companies raised $18 billion via new listings in the first three months of the year, more than 9 times as much as in the same period last year, while secondary share sales quadrupled to $47 billion.

But secondary listings from the likes of online search operators Baidu and travel platform Trip.com met with lower subscription levels and weak trading debuts.

A regulatory crackdown on Chinese technology groups has also dented valuations. Companies including Alibaba Group Holding and Tencent Holdings have been fined for violating antimonopoly rules as recently as Friday. On Thursday, Chinese authorities summoned 13 companies in the financial technology sector, including JD.com, for a "supervision interview" that examined corporate governance, regulatory arbitrage and unfair competition.

This month, the financial arm of JD.com withdrew its application for an IPO on Shanghai's STAR Market amid the tech sector crackdown

JD Logistics, which started as the in-house logistics unit of JD.com in 2007, was China's largest integrated supply-chain logistics services player by revenue in 2019, according to its IPO application.

It plans to use proceeds from the IPO to upgrade and expand its network and develop its technology.

China's integrated supply-chain logistics services industry is expected to grow from 2.02 trillion yuan in 2020 to 3.2 trillion yuan by 2025 amid the digitalization of the economy, the company said.

JD Logistics has 190,000 corporate customers across industries including consumer goods, apparel, home appliances, home furniture, automotive and fresh produce.

While the company's revenues have soared, it is a loss-maker. It posted a net loss of 2.8 billion yuan in 2018, 2.2 billion yuan in 2019, and 11.7 million yuan in the first nine months of 2020, according to the prospectus.

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