China's JD.com raises $230m for MRO unit

Other investors include Sequoia Capital China and CITIC Private Equity (CPE). The Series A represents a 10.7% equity interest in JD MRO on a diluted basis and it gives the business a post-deal valuation of $2 billion. As a result, JD MRO has become the fourth unicorn created by JD Group after JD Digits, JD Logistics and JD Health.

The investment could also be seen in the context of a general shift within China's technology sector from consumer-facing to business-facing applications. VC firms and strategic players have been diversifying their portfolios by placing emphasis on enterprise services. While JD.com is an e-commerce platform for consumers, JD MRO is a purchasing and supply chain solutions platform for corporate customers. The key difference is a lack of standardization on the industrial side; MRO requires a lot of customization.

“JD MRO has restructured the enterprise procurement process and greatly improved procurement efficiency,” says Hai Zhu, a managing director at Hina Group, a financial advisor on the deal.

JD MRO claims to have established 30 million digital standards for industrial products, covering protective equipment, power distribution, and cleaning supplies. It has three overriding ambitions: to become a full-category one-stop e-commerce platform; to operate a completely internal logistics system; and to build an online-to-offline “information plus commodities plus capital" solution underpinned by internet-of-things (IoT) technology.

"JD MRO has established the industry's most comprehensive digital standard library of industrial products and has created cloud sourcing services, original factory services, on-spot services, and local services among others,” said Bingdong Xu, a partner at GGV.

JD.com reported revenue of RMB146.2 billion ($120.6 billion) for the first quarter of 2020, up 20.7% year-on-year. Net profit came to RMB1.1 billion, down from RMB7.3 billion. The company had 387.4 million active customer accounts.

JD Logistics raised approximately $2.5 billion in 2018 from investors including Sequoia. JD Health, which consolidates a number of healthcare-related businesses that were previously managed in separate JD.com subsidiaries, received $1 billion the following year. CPE was among the backers.

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• Topics
• Greater China
• Early-stage
• Technology
• Industrials
• China
• JD.com
• GGV Capital
• Sequoia Capital