JD Logistics Prepare for IPO as Company Continues to Bleed Money

What’s new: JD Logistics Inc., the logistics arm of China’s e-commerce giant JD.com Inc., filed a prospectus for its Hong Kong IPO on Tuesday and is on track to become JD’s third publicly-traded unit.

The company had finished several rounds of financing before the initial public offering, giving it a valuation of $13.9 billion. The prospectus didn’t specify the amount of the money it seeks to raise.

Despite helps from its parent company, JD Logistics has been bleeding money for years. Richard Liu, when JD’s CEO, wrote in an internal email to the delivery leg in mid 2019 that the financing could only support JD Logistics’ operation for two years if the company kept losing money.

In the first nine months of 2020, its revenue climbed 43.2% year-on-year to 49.5 billion yuan, and it managed to narrow its losses to 11.71 million yuan from some 996 million yuan during the same period in 2019.

What’s the context: Initially established as an internal department of JD.com and its subsidiaries in 2007, JD Logistics became a stand-alone business in 2017 and began to conduct businesses for external customers, which contributed over two-fifths of its revenue in the first nine months of 2020.

Jingdong Technology Group Corp. holds a 79% stake in JD Logistics before the IPO, while Jingdong E-Commerce (Express) LLC holds another 7.9% shares. The rest are held by 16 companies, according to the company’s prospectus.

Wang Zhenhui, former CEO of JD Logistics, was removed from the position in Dec. 30 last year. Wang was replaced by Yu Rui, former head of human resource at JD.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.

Contact reporter Lu Yutong (yutonglu@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)

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