JD arm to raise fresh equity

JD Finance, the finance arm of China's second-largest e-commerce giant JD, said on Thursday it has signed binding agreements with investors to raise 13 billion yuan ($1.94 billion) in fresh equity that values the nascent company at 133 billion yuan.

Investors in this round include CICC Capital, a unit of investment bank China International Capital Corp, brokerage China Securities, private equity firm CITIC Capital and BOCGI, Bank of China's investment arm, JD Finance said in a statement.

According to JD Finance, the company will reach a valuation of 133 billion yuan after the closing of the fundraising, which is expected to be completed in the third quarter of 2018. The company also said it currently doesn't have an initial public offering plan.

Chen Shengqiang, CEO of JD Finance, said the company will adhere to the digital technology strategy and increase investments in data and technology in the future, stepping up efforts in global expansion to attract global high-tech talent.

JD Finance's fundraising follows that of Ant Financial Services Group, the affiliate of Alibaba Group Holding Ltd, which was valued at $150 billion when it raised $14 billion in its latest funding round last month.

Li Chao, a senior analyst at market research firm iResearch, said JD Finance has expanded its presence in supply chain and consumer finance, which are rooted in its online shopping platform, and offered financial services in rural areas, and the fundraising will have an influence on the future public listing of JD Finance.

"JD Finance has accumulated abundant business customers by providing credit products and wealth management services," said Lu Zhenwang, CEO of Shanghai-based Wanqing Consultancy.

Established in 2013, JD Finance offers sophisticated financial solutions, including supply chain finance, consumer finance, wealth management, crowd funding, insurance and securities. The company is applying for financial service licenses as the number of middle-income earners in the country surges.

It has worked with more than 700 financial institutions, and served 8 million small businesses both online and offline and 400 million individual users.

In January 2016, JD Finance raised 6.65 billion yuan in its A-round fundraising from investors such as Sequoia Capital China, China Harvest Investments and China Taiping Insurance, with its valuation reaching 46.65 billion yuan.

In mid-2017, JD spun off the financial unit, making it a fully Chinese-owned entity, which is seen as a preparatory move toward its listing on a domestic stock exchange, as well as obtaining more financial licenses.

Ant Financial was spun off from Alibaba and obtained business independence in 2014, making it a powerful financial player.