JD Logistics, the distribution arm of Chinese e-commerce giant JD.com, is planning to raise up to HK$26.4 billion (US$3.4 billion) in its initial public offering (IPO) on the Hong Kong Stock Exchange.
The warehousing and logistics company will sell 609 million shares – 10% of its total shares – with each priced between HK$39.36 and HK$43.36, according to the company’s filings on Monday.
The final price will be set on Friday and the company is expected to begin trading on May 28 in Hong Kong.
If JD Logistics chooses to exercise an over-allotment option, it will then be able to sell up to 91 million more shares to further raise up to $510 million. This would make it one of the biggest deals in Hong Kong this year following Tencent-backed Kuaishou’s IPO in late January which raised $5.4 billion, according to Reuters.
The report added that JD Logistics will spend 55% of the fresh funds on upgrading and expanding its logistics network over the next three years, while another 20% would go towards developing its technologies.
Seven cornerstone investors including SoftBank Vision Fund, Temasek, Blackstone and Tiger Global have agreed to subscribe for about $1.53 billion of stock, Bloomberg reported.
The distribution service, which operates more than 900 warehouses nationwide as of the end of 2020 and delivers packages for e-commerce platform JD.com, was spun off into a standalone entity in 2017.
The company said its sophisticated technology capabilities enable it to process more than 1.3 million orders per day during peak seasons as well as operate a fully unmanned warehouse in Shanghai.
JD Logistics saw its revenue climb 47% to 73.4 billion yuan in 2020, according to its prospectus. It also reported a net loss of 4 billion yuan last year, compared to 2.2 billion yuan in 2019.
For the first quarter of 2021, the firm recorded 22.4 billion yuan in revenue, up 64.1% from the same period in 2020.
Two other JD.com-related offerings also took place in Hong Kong recently, including online health-care unit JD Health International’s $4 billion IPO last December, as well as its own second $4.6 billion listing in June.