This undated photo shows JD Logistics employees handling parcels in Wuhan, Hubei province. (ZHU XINGXIN / CHINA DAILY)
JD Logistics Inc., the delivery arm of e-commerce giant JD.com Inc., is set to raise about HK$24.6 billion (US$3.2 billion) after planning to price its Hong Kong initial public offering near the bottom of a marketed range, according to people with knowledge of the matter.
The warehousing and shipping company is telling prospective investors that it plans to price 609.2 million shares at HK$40.36 each, the people said, asking not to be identified as the information is private. It had marketed the shares at HK$39.36 to HK$43.36 apiece. An external representative for the company didn’t immediately respond to a request for comment.
JD Logistics’ shares are due to start trading in Hong Kong on May 28
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The JD.com unit’s debut next week will test the waters for investor demand in Hong Kong’s IPO market, which has cooled because of concerns over rising inflation and weakness in global stocks. It is the second-largest listing in the city this year, after short video company Kuaishou Technology’s US$6.2 billion float in February.
The pricing close to the bottom already suggests investors were cautious about the price tag, even if JD Logistics stopped taking orders a day earlier than planned on strong demand. At the low end of the range, the company would have been valued at US$31 billion, well below the US$40 billion valuation it had been targeting at the start of the IPO process.
While first-time share sales in the Asian financial hub have had their best start to the year on record, with US$20.5 billion raised so far, according to data compiled by Bloomberg, investor appetite for new stock offerings has petered out recently, with the massive first-day pops seen at the beginning of the year all but gone. For example, SF Real Estate Investment Trust fell 16.5 percent in its debut on the Hong Kong bourse Monday.
Other companies waiting in the wings include online healthcare giant WeDoctor, which could raise about US$2 billion, and rural e-commerce platform Huitongda Network Co., which is eyeing a US$1 billion IPO as soon as the end of this year, Bloomberg News has reported. China Resources Holdings Co. is also weighing a Hong Kong IPO of its supermarket business that could raise as much as US$2 billion, people familiar with the matter have said.
JD Logistics attracted seven cornerstone investors to its offering, who agreed to subscribe for about US$1.53 billion of stock, including SoftBank Vision Fund, Temasek Holdings Pte, Blackstone Group Inc. and Tiger Global.
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Created in 2007 and set up as a standalone unit under JD.com a decade later, JD Logistics’ networks include both so-called last mile and longer distance lines, as well as cold chain and bulky item networks, according to its prospectus. It operated more than 900 warehouses across the Chinese mainland as of the end of 2020. It is still loss-making, reporting a net loss of 4.1 billion yuan (US$637 million) last year.
JD Logistics’ shares are due to start trading in Hong Kong on May 28. BofA Securities Inc., Goldman Sachs Group Inc. and Haitong International Securities Group Ltd. are joint sponsors for the listing.