PE-backed JD Logistics set for Hong Kong listing

It is set to become the second JD.com unit to list in Hong Kong within six months after JD Health raised HK$26.9 billion ($3.48 billion) in December. This was the largest IPO by a PE-backed Asian business last year and the largest by any Chinese company in Hong Kong since Meituan in 2018.

Hillhouse Capital is a significant investor in both subsidiaries, having committed $830 million to JD Health in 2020 and $360 million to JD Logistics in 2018. It received additional shares last year when JD Logistics completed the RMB3 billion ($432 million) acquisition of Kuayue Express, a less-than-truckload delivery specialist backed by Hillhouse and several other investors.

Hillhouse and Eastar Capital Management are the largest external shareholders in JD Logistics, each owning 2.9%. JD.com has 79.12%. A related entity, Jingdong E-commerce, contributed $980 million to the Series A in 2018 that featured Hillhouse and Eastar, and which accounts for nearly all the company’s private funding. Sequoia Capital, which put in $180 million, is the only other investor with more than 1%.

The round also featured contributions from China Life Insurance ($100 million), The Carlyle Group ($100 million), China Merchants Group ($100 million), Tencent Holdings ($60 million), a fund-of-funds run by China Development Bank Capital ($100 million), China Structural Reform Fund ($50 million), and GLP-controlled Hidden Hill Capital ($10.2 million), among others.

JD Logistics was the largest player in China’s integrated supply chain logistics services market in 2019 by revenue, according to CIC Consulting, the prospectus states. That market is projected to grow from RMB2.02 trillion in 2020 to RMB3.18 trillion in 2025. At present, it is highly fragmented, with the top 10 players accounting for 7.9%.

JD Logistics served more than 190,000 corporate customers last year across industries such as fast-moving consumer goods, apparel, home appliances, furniture, automotive, and fresh produce.

As of September 2020, the company operated more than 800 warehouses with approximately 20 million square meters in gross floor area. It also has 28 smart warehouses covering 18 cities, including a fully unmanned facility in Shanghai that can process more than 1.3 million orders per day during peak seasons. Deliveries are handled by a team of over 190,000.

JD Logistics launched in 2007 as JD.com’s in-house logistics unit and began offering same-day and next-day delivery services three years later. In 2016, New Dada was formed through the merger of JD Daojia, an on-demand retail platform, and New Dada, a crowdsourced delivery business that provides intra-city services. JD Logistics is no longer the holding entity for New Dada.

JD.com was responsible for 56.6% of JD Logistics’ RMB49.5 billion in revenue for the nine months ended September 2020. The net loss for the period was RMB11.7 million. In 2019, the company posted RMB49.8 billion in revenue, up from RMB37.9 billion in 2018. Its net loss narrowed from RMB2.8 billion to RMB2.2 billion.

In 2017, JD.com spun out its financial services unit, JD Finance, selling majority control to third-party investors but retaining a profit share and the right to swap that for equity. Last year, the company secured $230 million in private equity funding – at a valuation of $2 billion – for JD MRO, a subsidiary that specializes in industrial maintenance, repair and operations (MRO).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• IPO
• Support services
• China
• Logistics
• Hillhouse Capital Management
• Sequoia Capital
• JD.com
• GLP
• The Carlyle Group
• Tencent
• China Development Bank
• TMT