JD.com Logistics Unit Raises $2.5 Billion for Expansion

Nasdaq-listed Chinese e-commerce giant JD.com Inc. has announced that it has raised $2.5 billion to finance the expansion of its logistics unit.

The final amount is even greater than the $2 billion figure that Caixin reported in January, which was based on sources close to JD.com. The deal is expected to be closed by the end of the first quarter of this year, the company said Wednesday.

Caixin has learned from sources close to the deal that JD Logistics was valued at 80 billion yuan ($12.6 billion), rising to 100 billion yuan after the deal. JD.com will still hold 81.4% of the logistics unit after the deal.

This funding round was led by Hillhouse Capital and other investors including Sequoia China, China Merchants Group, Tencent, China Life, China Development Bank Capital FOF, China Structural Reform Fund and ICBC International.

Richard Liu, CEO of JD.com, said the latest funding is aimed at expanding the company’s “lead in areas like automation, drones and robotics,” according to a press release.

JD.com is China’s second-largest e-commerce platform. Its logistics unit is known for its efficiency and speed of delivery, compared with its archrival Alibaba Group Holding Ltd., which mainly relies on third-party delivery services.

JD.com spun off its logistics unit in April last year as a stand-alone subsidiary.

Liu told Caixin on the sidelines of January’s World Economic Forum in Davos, Switzerland that the logistics unit is raising money for a future independent listing in Hong Kong or the Chinese mainland.

JD Logistics has long been a money-losing unit. It recorded net losses of 309 million yuan and 295 million yuan in the first and third quarters of last year, respectively, only making a profit of 162 million yuan in the second quarter.

JD.com reported third-quarter revenue of 83.7 billion yuan, up 39% year-on-year, and a net profit of 1 billion yuan, its best ever quarterly result.

Contact reporter Wu Gang (gangwu@caixin.com)