The Chinese online retailer JD.com Inc., which has just had its initial public offering, has managed to raise 1.78 billion dollars. The result is higher than the initially expected and indicates that e-commerce companies in the country are subject to increased investors interest.
The company was reported to be also selling shares to the biggest Internet company in Asia – Tencent Holding Ltd., valued at about 1.3 billion dollars. Both transactions raised 3.1 billion dollars altogether.
JD.com Inc., which has a very similar business model as Amazon.com Inc. sold its shares above the marketed range. It offered its shares for 16 do 18 dollars per share and managed to sell a total of 93.7 million American depositary shares at the price of 19 dollars apiece. JD.com Inc. will be listed on the Nasdaq Stock Market under the abbreviation JD and its shares will start trading today.
Recently, the market for technology initial public offerings in the U.S. has not been so attractive to investors due to their scepticism about the value of early-stage companies. The initial public offering, values JD.com at about 26 billion dollars, which is about 2.3 times their last years sales of 11.5 billion dollars. The offering is the largest one ever of a Chinese Internet company listing in New York.
The initial public offering was a test which was there to prove whether fast-growing, but unprofitable online retailers will be able to attract investors or the current economic environment will be problematic.
The initial public offering of JD.com Inc. comes at a time when another Chinese e-commerce company has announced that its going public. Alibaba Group Holding Ltd, which is larger than JD.com has scheduled its initial public offering in the U.S. in May. Despite that the two companies operate in the same market, they have different business models.
Alibaba Group Holding unites sellers and buyers together via its platform, while JD.com Inc. is focused on online-direct sales and operates its own ware houses. The latter is also focused on driving mobile purchasing on its website. Mr. Brian Nowak and Mr. Xin Yang, who are analysts working at Susquehanna Financial Group wrote in a note to the Groups investors, which was cited by the Wall Street Journal: “Think of JD as Amazon in 2009 in a market growing [two to three times] faster.” Alibaba Group Holding, on the other hand, is believed to operate more like eBay.
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