PE-backed JD Logistics raises $3.2b in Hong Kong IPO

It is the fourth-largest private equity-backed offering in Asia in the past 12 months and the third largest in Hong Kong. Second spot in Hong Kong is also occupied by a JD.com spinout: JD Health raised $3.48 billion last December.

JD Logistics sold 609.2 million shares for HK$40.36 apiece, towards the bottom end of the indicative range, according to a filing. Seven cornerstone investors – among them SoftBank Vision Fund 2, Temasek Holdings, Tiger Global Management, and China Structural Reform Fund – covered just under half the offering. The stock opened at HK$46.05 before settling back to close at $41.70.

The company now has a market capitalization of $32.7 billion. It raised $2.57 billion in private funding between 2018 and 2020 from the likes of Hillhouse Capital, Sequoia Capital China, The Carlyle Group, and GLP-controlled Hidden Hill Capital.

JD Logistics was the largest player in China’s integrated supply chain logistics services market in 2020 by revenue with a 2.7% share, according to China Insights Consulting, the prospectus states. That market is projected to grow from RMB2.02 trillion ($260 billion) in 2020 to RMB3.18 trillion in 2025. At present, it is highly fragmented, with the top 10 players accounting for 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 December 2020, the company operated more than 900 warehouses with approximately 21 million square meters in gross floor area. It also had 32 smart warehouses covering 22 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.

The company posted RMB73.4 billion in revenue for 2020, up from RMB49.8 billion the previous year. Over the same period, its net loss widened from RMB2.2 billion to RMB4 billion. Parent company JD Group and its associate entities were responsible for 53.8% of revenue in 2020, down from 61.9% in 2019.

JD.com’s post-IPO interest in JD Logistics is 64.42%. Hillhouse is the largest external shareholder with 2.38%, followed by Sequoia with 1.19%. No other investor has more than 1%. Hillhouse committed $360 million to JD Logistics in 2018 and received additional shares last year when JD Logistics acquired one of its portfolio companies, less-than-truckload delivery specialist Kuayue Express.

Hillhouse’s $360 million contribution was matched by Eastar Capital Management, while JD.com put in $980 million. There were investments of $100 million apiece from China Life Insurance, Carlyle, China Merchants Group, and a fund-of-funds run by China Development Bank Capital. Smaller contributions came from Tencent Holdings, China Structural Reform Fund, and Hidden Hill.

The JD Logistics investor roll call also includes GenBridge Capital, Trustbridge Partners, CDH Investments, Eastern Bell Capital, Cathay Capital, Hammer Capital, Bull Capital, China Renaissance, SBCVC, and Vision Knight Capital, among others.

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• Topics
• Greater China
• IPO
• Support services
• China
• Logistics
• JD.com
• Hillhouse Capital Management
• Sequoia Capital
• The Carlyle Group
• Hidden Hill Capital
• Tencent
• GenBridge Capital
• Bull Capital
• CDH Investments Management
• Trustbridge
• Eastern Bell Venture Capital
• Vision Knight Capital
• Cathay Capital Private Equity