PE And Hedge Fund Investors Set For Partial Exit At JD.Com IPO


Beijing-headquartered Chinese e-commerce operator JD.com, Inc. is planning to offer 93.7 million American Depository Shares (ADS) for US$16 to US$18 apiece on the NASDAQ, raising a maximum of US$1.7 billion, according to a regulatory filing submitted on May 9.

The latest filing to the U.S. Securities and Exchange Commission raised JD.com’s total fundraising target from its original filing in January, which planned to raise as much as US$1.5 billion.

This is in contrast to a number of other Chinese companies who have cut IPO sizes or cancelled IPO plans all together.

The filing also indicated that a number of JD.com’s financial shareholders are selling shares at the time of the IPO.

U.S. hedge fund Tiger Global Management is to sell 13.358 million shares. The firm holds a 18.1% stake of JD.com before the IPO.

Asia-focused hedge fund Hillhouse Capital Management, with a pre-IPO stake of 13%, will sell 9.568 million shares. Hillhouse Capital is managed by Zhang Lei, a Yale graduate who worked with the Yale Endowment while as a student there.

DST Global, an investment firm founded by Russian businessman Yuri Milner, is to sell 6.772 million shares. It holds 9.2% of JD.com before the IPO.

An entity controlled by Capital Today China Growth Fund, L.P., a fund managed by Capital Today founded by Kathy Xu, will sell 5.756 million shares. It holds a stake of 4.8%.

Sequoia Capital and Chinese private equity firm Bull Capital Partners Ltd. are not selling any shares in the IPO.

In March, Shenzhen-based Chinese internet services giant Tencent Holdings Ltd said it would acquire a 15% stake in JD.com for US$214.7 million. Tencent’s stake is subject to a three-year lock-up period.

Tencent’s investment diluted other investors’ stakes. For example, Tiger Global’s stake was diluted to 18.1% from 22.1%. Hillhouse Capital’s stake was diluted to 13% from 15.8%.

JD.com recorded US$8.04 billion in total revenue during the first nine months of 2013, compared with US$6.76 billion for the whole year of 2012. It had US$10 million of net profit during the first nine months of 2013, compared with a US$283 million loss for the whole year of 2012, according to its filing.

China Expert network
 
China Expert network

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