JD Logistics eying overseas IPO with $30 billion valuation

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JD Logistics, the logistics unit of China’s second largest e-commerce platform JD.com, is eyeing a potential overseas IPO that could raise between USD 8–10 billion.

Reuters is reporting, citing two insiders, that JD Logistics is targeting a valuation of $30 billion, or more and is expected to be listed on either the New York, or Hong Kong Stock Exchange. The unit is expected to select banks for the IPO in the second quarter of 2020, with the funds said to be ear-marked for warehouse expansion and potential acquisition purposes, explains one of the sources.

JD.com spun off its logistics unit into a standalone entity in 2017, but remains the majority shareholder, and a year later the company’s valuation reached nearly $13.5 billion. JD Logistics is one of the top players in China’s warehousing space sector and operates more than 650 warehouses.

Since being spun off, JD Logistics has opened up its delivery and warehousing services to outside companies. A 2018 funding round raised $2.5 billion from investors including Hillhouse Capital, Sequoia Capital China, China Merchants Group and Chinese internet giant Tencent (TCEHY). Tencent has a strategic alliance with JD.com and owns a significant stake.

In November, the Chinese e-commerce giant topped third-quarter estimates as revenue climbed 24 per cent on a year earlier to $18.9 billion, the second straight quarter of accelerating growth. JD.com also saw fourth-quarter revenue of $23.2 billion to $23.9 billion, above analyst estimates for $23 billion.

Annual active customer accounts rose 4.0 per cent to 334.4 million while mobile monthly active users jumped 36 per cent. More than 70 per cent of new customers were from lower-tier cities, JD.com says.  

In September, JD.com launched its social e-commerce platform, Jingxi, as part of its strategy to expand its presence in the lower-tier cities. Formerly known as JD Pinggou, Jingxi was relaunched in September to combat group-buying competitors Pinduoduo and Alibaba’s Juhuasuan.

Jingxi’s WeChat mini-program comes armed with a special access point on WeChat and a sleuth of different functions catering to consumers in lower-tier cities.

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