PE investors set for another JD.com windfall

Other major external investors Tiger Global Management and Tecent Holdings will not sell any shares.

The three selling shareholders between them own 635.2 million ordinary shares - two Class A ordinary shares equal one American Depository Share (ADS) - in JD.com. If, as a regulatory filing suggests, their holdings are reduced to zero, then the offering could be worth around $7.5 billion based on the company's last close. The company has yet to indicate how many shares will be sold or at what price.

JD.com went public in May, raising $1.78 billion through the sale of 93.7 million ADS at $19 apiece, above the indicative range of $16-18. Most investors agreed to a 180-day lock-up period.

Capital Today, DST and Hillhouse received proceeds of $54.7 million, $64.3 million and $90.9 million, respectively, after making partial exits via the IPO. Their stakes in JD.com were reduced to 6.7%, 7.9% and 11.2%. Tiger Global still owns 15.6% of the company, while Tencent - which invested shortly before the IPO as part of a strategic relationship with JD.com - has 17.6%.

Since its share offering, JD.com has seen rival e-commerce player Alibaba Group raise $25 billion in the world's largest-ever IPO. The two companies are rivals but operate under different business models: while Alibaba runs an online marketplace providing merchants to sell goods to customers, JD.com adopts a different business strategy that it acts as a direct seller of goods, which are held in its self-supported warehouses and relied on its own delivery services.

Formerly known as 360buy or Jindong.com, JD.com received more than $1.7 billion in venture capital and private equity funding in the three years ahead of its offering. Capital Today was an even earlier investor, committing an initial $18 million to the company between 2007 and 2009. The PE firm was reportedly sitting on an unrealized return of more than 100x following the IPO.

JD.com posted RMB69.3 billion ($11.5 billion) in revenue at the end of 2013, up from RMB41.4 billion during the same period in 2012. It reported a net loss of RMB1.3 billion last year, compared to net loss of RMB1.7 billion in 2012.

The follow-on offering comes on the back of strong third-quarter results announced by JD.com. Revenue jumped 61% year-on-year to RMB29 billion, while gross merchandise volume was up 111% at RMB67.3 billion. The net loss was RMB164.4 million.

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