JD.com prices up IPO to raise $1.78b on Nasdaq debut

Chinese e-commerce company JD.com Inc has priced its initial public offering in the United States above the marketing range to raise $1.78 billion, suggesting strong demand for Chinese e-commerce companies as larger rival Alibaba Group Holding Inc prepares its own highly anticipated US debut.

Loss-making JD.com, backed by Saudi billionaire Prince Alwaleed bin Talal's Kingdom Holding Co, is set to debut on the Nasdaq stock exchange on Thursday in what may be the biggest listing of a Chinese company in the US.

China's No 2 e-commerce company priced its American Depositary Shares at $19 each, above the $16-$18 per ADS indicated range, valuing the company at more than $25 billion, according to its underwriters.

The IPO will not dilute demand for e-commerce giant Alibaba but instead will further consolidate the dominant positions of Alibaba and JD in China's e-commerce market, said Lin Wenbin, an analyst with IT consultancy Analysys International.

JD.com, which has forged a close partnership with Alibaba arch-rival Tencent Holdings Ltd, will raise $1.31 billion from the sale of 69 million ADS.

It would raise another $1.31 billion by issuing shares to Tencent, JD.com said. JD.com and Tencent agreed to merge their e-commerce operations in March, and as part of that deal, Tencent agreed to subscribe to JD.com shares.

"I don't think Alibaba's domination will be challenged, but the rise of JD is unstoppable, especially after teaming up with Tencent Holdings Ltd's popular mobile messaging app WeChat," said Lin.

The 10-year-old company, the biggest direct seller of online goods in China, will remain tightly controlled by founder and CEO Liu Qiangdong after the IPO through special shares that grant him extra voting rights.

JD.com awarded billionaire Liu a one-off bonus as the company prepared for its IPO, booking share-based expenses of $591 million, according to a securities filing. The award was worth $1.78 billion at the IPO price.

China's business-to-consumer e-commerce sales may surpass $180 billion this year due to rising Internet usage, expanding middle-class incomes and a better distribution network, according to New York-based market research firm eMarketer.

JD.com had an 18.3 percent share of that market as of the third quarter of 2013, according to Beijing-based iResearch. It claims some 30 million-plus active customers and saw net revenue jump 70 percent to $8 billion in 2013's first nine months.

The selling shareholders, including CEO Liu, Tiger Global Management, Hillhouse Capital Management, DST Global funds and Capital Today, would pocket $468 million.

Formerly known as 360Buy, JD.com has already raised more than $2 billion in previous years from investors.

Despite the fact that Chinese e-commerce players are expected to become increasingly competitive, especially with the money they raise in the US market, Brian Hui, vice-president of Amazon China, was happy to see more of that company's Chinese counterparts going public.

In a recent interview with China Daily, Hui said that China's e-commerce market is becoming "healthier and healthier", with almost all of its major players planning IPOs this year.

"Being a listed company means that you need to follow certain rules in terms of the financial operation and management," he said, adding that the e-commerce market in China is entering a new stage, with more companies following the same code of conduct.

Agencies contributed to this story.

mengjing@chinadaily.com.cn