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Delivery company Dada Nexus latest China firm to file for US IPO

Dada Nexus’ IPO marks the second China-based company aiming to go public in the US after the Luckin Coffee scandal involving fraudulent financials.

Provided by Dada Group

Dada Nexus Limited, a Shanghai-based on-demand delivery startup backed by Walmart and JD.com (NASDAQ:JD), is planning an initial public offering (IPO) on the Nasdaq market, according to a prospectus filed with the Securities and Exchange Commission on Tuesday. Dada Nexus has not disclosed how many shares it will offer and at what price.

Dada Nexus operates JD Daojia, a service which allows Chinese residents to order groceries online from various supermarkets including Walmart, and pick them up at their doorsteps in about an hour. JD Daojia has a standalone app and a channel inside JD.com’s main app.

JD Daojia was set up in 2015 as a subsidiary of JD.com focusing on local retail and was spun off in 2016 to be acquired by Dada Nexus the same year. JD.com now holds a 47.4% stake in Dada Nexus.

Dada’s IPO marks the second China-based company aiming to go public in the US after the Luckin Coffee scandal involving fraudulent financials. Earlier this month, Kingsoft Cloud (NASDAQ: KC) raised USD 510 million after offering 30 million American depositary shares at USD 17 each. The company’s shares closed more than 40% up 0n its first trading day.

Gross merchandise volume on JD Daojia reached RMB 15.7 billion (USD 2.2 billion) in the twelve months ended on March 31, 2020, up by 92% year-on-year, according to the prospectus.

Dada Nexus’s fulfilment arm, called Dada Now, runs on a fleet of gig economy drivers–634,000 part-time workers who fulfilled 822 million orders from the end of March 2019 to March 2020, according to the company. Its intra-city delivery service has covered more than 700 cities and counties in China, and its last-mile delivery service covered more than 2,400 cities and counties.

Dada generated RMB 3.1 billion (USD 437.8 million) in net revenues in 2019, up 61.3% compared with 2018. In the first three months of this year, when on-demand delivery boomed as people stayed home amid the COVID-19 pandemic, Dada’s revenue hit RMB 1.1 billion, growing 108.9% year-on-year.

The company incurred net losses of RMB 1.7 billion (USD 235.8 million) in 2019, down from RMB 1.9 billion in 2018. Its net losses for the first three months of this also narrowed to RMB 279.3 million from RMB 336.9 million over the same period in 2019.