Firm to raise $2 billion for logistics unit
China’s second-biggest e-commerce firm JD has kicked off a fundraising round at its logistics unit with a target of at least $2 billion, and eventually plans to list the business overseas, people with direct knowledge of the matter said.
JD, which only trails Alibaba Group Holding Ltd in China’s e-commerce market, has invited a select group of investors to join the funding round that values its logistics business, JD Logistics, at around $10 billion, two of the people told Reuters.
The move comes as China’s major e-commerce companies are looking to bulk up their logistics businesses to support their global expansion ambitions and boost revenues by offering services to third-party entities.
Chinese investment firm Hillhouse Capital Group and Sequoia Capital China will likely be lead investors of JD Logistics’ funding round, while a number of Stateowned and international investors have also shown strong interest in the deal, according to the people.
Demand could be strong enough that smaller investors putting up just $100 million — the floor for investments, according to two people — would have to prove they could help the logistics unit to bring in new business, one of them said.
JD declined to comment on this matter. Hillhouse and Sequoia did not respond to requests for comment. The sources could not be named as the information is confidential.
JD Logistics is currently 100 percent owned by JD. It is not clear when and where the IPO process will be undertaken.
“The fundraising and IPO would help JD Logistics operate as an independent company and offer its delivery services to more third-party clients,” said Lu Zhenwang, CEO of Shanghai-based Wanqing Consultancy, adding the time is ripe for JD Logistics to be spun off from JD.
JD Logistics has been profitable, and the orders from third-party seller platforms and outside partners have witnessed rapid growth, which surpassed the growth rate of JD’s self-owned orders, said Wang Zhenhui, CEO of JD Logistics in an earlier interview.