JD.com, one of China’s largest e-commerce sites, has applied to raise capital in Hong Kong in a secondary listing, in the world’s largest fundraising exercise this year while the global financial industry remains idle amid the coronavirus pandemic.
Nasdaq-traded JD.com (JD) has made a confidential filing for the Hong Kong listing, which could deliver a welcome boost to the city’s stock market, according to two people familiar with the matter. The Beijing-headquartered company could raise as much as USD 2 billion via the listing, one of the sources, who declined to be identified, said. The amount raised will depend on the closing price of JD.com’s US-listed shares between filing and listing.
The online shopping firm is following in the footsteps of peer Alibaba Group Holding, the owner of the South China Morning Post, which raised USD 13 billion in a secondary listing in Hong Kong in November. A JD.com spokeswoman did not respond immediately to a request for comment. Secondary listings by Chinese technology giants are a vote of confidence for Hong Kong as a financial hub after it has been battered by months of anti-government protests and the coronavirus pandemic.
Hong Kong’s listing reforms in April 2018 have made it easier for companies with dual classes of shares – a structure favored by technology companies such as Facebook and Google – and pre-revenue biotechnology firms to seek initial public offerings as well as secondary listings in the city. It came after the Hong Kong stock exchange lost out to New York in the race for Alibaba’s USD 25 billion IPO in 2014.
JD.com, founded by Richard Liu Qiangdong, the 40th richest person in China, said in September that it was targeting delivery times of as little as 30 minutes across China by using various offline retail outlets, including Walmart, to directly get products to customers.
That program would intensify JD.com’s rivalry with Alibaba, which is integrating online and offline shopping in the world’s second-largest economy.
The success of Hangzhou-based Alibaba’s listing in Hong Kong – the second-biggest globally last year after Saudi Aramco’s IPO and the third-largest technology offering on record – has spurred more Chinese firms to seek their own listings closer to home, according to bankers, economists, and market watchers.
Following its secondary listing, Alibaba became the most valuable listed company by market capitalization in Hong Kong, eclipsing the likes of Tencent Holdings, HSBC and China Mobile. It has also been one of the bourse’s most liquid stocks since it began trading on November 26. Hong Kong-listed shares in Alibaba have risen 5% since their debut.
Hong Kong’s IPO market has been a relatively resilient and efficient capital raising hub despite the coronavirus, according to an April report by consultancy Euromonitor. The city ranks third globally, behind China and the US, in terms of the security and stability of its IPO market, it said.
JD.com has chosen Bank of America and UBS to act as sponsors for the listing. The two investment banks also advised on the US debut of JD.com’s American depositary receipts in 2014. Hong Kong’s securities watchdog lifted a ban on UBS accepting sponsor roles in January.
This article was originally published by the South China Morning Post.