JD Logistics is set to launch one of Hong Kong’s largest share sales this year.
The company says it will price its shares between $HK39.36 and $HK43.36 (US$5.07 and $5.58) each as the company aims to raise up to $3.4 billion, according to the company’s filings.
The logistics offshoot of JD will sell 609.1 million shares in the deal which is 10 per cent of the company’s total shares, the filings said.
An over-allotment option, or so-called greenshoe, exists to sell a further 91 million shares that would raise up to a further $510 million.
At that size, JD Logistics will be one of the biggest deals in Hong Kong this year following the Kuaishou Technology IPO in late January which raised $5.4 billion.
The company recorded 22.4 billion yuan ($3.5 billion) in revenue in the first quarter of 2021, up 64.1 per cent from the same period in 2020.
Its gross profit for the quarter reached 230.7 million yuan ($35.8 million), down 72.7 per cent from the same time last year, which it blamed on the pandemic impact and adding 60,000 workers to its headcount during the year.
In its prospectus, JD Logistics said it expected an insignificant impact on its business from the Chinese government’s tighter anti-monopoly regulations of internet platform businesses.
The company, it said, controls 2.7 per cent of the integrated supply chain logistics market.
JD Logistics’ IPO is expected by analysts to be a barometer of investor appetite towards major share sales following volatility in global equities markets over the past week, led by concerns inflation is starting to emerge around the world.
JD Logistics will be valued at $34 billion at the top of the price range and seven high profile cornerstone shareholders led by SoftBank Group Corp’s Vision Fund and Temasek have taken shares worth up to $1.53 billion, or 45 per cent of the IPO, according to the filings.
The final price will be set on Friday and the stock will start trading on the Hong Kong Stock Exchange on May 28.
JD Logistics said 55 per cent of the funds raised would be spent on upgrading its logistics network in the next 12 to 36 months, while a further 20 per cent would go towards technology development.
JD spun off its logistics unit into a standalone entity in 2017 and then opened up its delivery and warehousing services to third-party companies.
JD.com carried out a Hong Kong secondary listing in June last year which raised $3.87 billion.
- Reporting by Scott Murdoch in Hong Kong; additional reporting Riya Sharma in Bengaluru; Editing by Diane Craft and Stephen Coates, of Reuters.