JD.com restructures in advance of IPO

Visitors crowd the stand of online shopping site JD.com, formerly called jingdong.com or 360buy.com, during an exhibition in Beijing, March 13, 2014. [Photo / dfic.cn]

JD.com Inc, China's second-largest e-commerce company, will be split into four different business units, a move that not only paves the way for its upcoming initial public offering in the United States but also will give the businesses room to grow.

The Beijing-based company, which filed in late January for the IPO to raise $1.5 billion, confirmed on Wednesday that JD will be divided into two groups, a subsidiary and a business division.

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The restructuring will allow the company to have an e-commerce group, a finance group, a subsidiary - paipai.com - and an overseas business division, according to a statement from JD.

Liu Qiangdong, founder of the e-commerce player, will head JD as its chief executive officer after the reorganization.

JD didn't reveal the intention of the restructuring. But with an IPO just around the corner, analysts said that a well-organized business structure will allow it to tell a better story to investors on Wall Street.

"US investors are very interested in riding the wave of the rapidly growing e-commerce market in China. The reorganization can certainly help JD in attracting the attention of investors, especially since e-commerce king Alibaba has opted to go public in the US as well," said Lin Wenbin, an analyst with IT consultancy Analysys International.

Wang Xiaofeng, an analyst with US-based consultancy Forrester Research Inc, agreed with Lin, who said impressing investors at the IPO was certainly part of the plan when it announced the restructure before going public.

But Wang said that cannot be JD's sole intention. "JD has built up its empire from business-to-customer e-commerce. It is high time that JD expanded into other sectors and enriched its portfolio to take its business to the next level," she said.

According to JD's filing to the US Securities and Exchange Commission, the company's goal is to "become the largest e-commerce company in China", despite the fact that there is a sizable gap between JD and the current e-commerce No 1, Alibaba Group Holding Ltd.

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