JD Health Raises $3.5 Billion From Hong Kong's Red-Hot Capital Markets
December 02 2020 - 04:28AM
Dow Jones News
By Joanne Chiu
The telemedicine arm of Chinese e-commerce giant JD.com Inc.
raised $3.5 billion in Hong Kong's largest initial public offering
this year, taking proceeds from new listings in the city to a
10-year high.
JD Health International Inc., which operates China's largest
online retail pharmacy and provides other health-care services,
priced its stock offering at the top end of an indicative range,
after strong demand for its shares from investors.
The IPO, which could raise up to $4 billion if underwriting
banks exercise an option to buy additional stock after it starts
trading, gives the Beijing-based company a valuation of $28.5
billion.
More than 120 companies have raised $44.6 billion through IPOs
and secondary listings in Hong Kong this year, the highest since
2010 when the city logged nearly $68 billion from new listings,
according to Dealogic. Companies from China have dominated the
rankings, and make up the majority of Hong Kong's more than $5
trillion stock-market capitalization.
Jie Lu, head of investments for China at Robeco, said Hong Kong
remains an important financial hub for Chinese companies to raise
capital. Some investors had been concerned about Hong Kong's status
as a major global financial center during recent geopolitical
tensions in the city, but Beijing wouldn't want to close "this
important window for international investors to access China," he
said.
Technology firms that listed in recent years have also been able
to sell more stock. On Wednesday, Chinese smartphone maker Xiaomi
Corp. raised $4 billion via a share placement and sale of
convertible bonds, about a week after the company reported a jump
in global smartphone sales for the three months to September.
Xiaomi's shares fell 7.1% Wednesday after the new shares were
sold at a discounted price. They have more than doubled in the year
to date, giving the company a market capitalization of roughly $76
billion.
The robust fundraising is solidifying Hong Kong's status as a
major capital raising hub for Chinese companies amid strained
relations between China and the U.S., and as American policy makers
have sought to step up scrutiny of New York-listed Chinese
companies.
U.S. lawmakers on Wednesday are likely to consider a plan that
would force Chinese companies whose shares trade on American
exchanges to comply with audit-oversight rules within three years,
or delist from the New York Stock Exchange or Nasdaq Stock
Market.
So far, Alibaba Group Holding Ltd., Yum China Holdings Inc. and
JD.com have been among 10 U.S.-listed companies that have added
secondary listings in Hong Kong over the past 13 months.
Robeco's Mr. Lu said an increasing number of U.S.-traded firms
returning to Hong Kong or the mainland for secondary listings would
help them hedge any risk of U.S. restrictions on Chinese
companies.
JD Health fixed its IPO price at 70.58 Hong Kong dollars per
share, and is scheduled to start trading Dec. 8, according to a
term sheet seen by The Wall Street Journal. The company plans to
use the funds raised to make investments and expand its business.
Its listing will likely also result in a handsome payday for
JD.com's billionaire founder Richard Liu.
This week, the company stopped collecting orders from
institutional buyers a day ahead of schedule, after the deal was
multiple times oversubscribed, according to a person familiar with
the situation. The buyers include investment funds that typically
hold stocks for long periods. BlackRock Inc., Tiger Global
Singapore Pte. and Hillhouse Capital Management Ltd. were among
so-called cornerstone investors that committed to buy up to $1.35
billion stock in the IPO.
Demand from individual investors was also strong, according to
Bright Smart Securities Chief Executive Edmond Hui Yik-bun, who
said many investors took out margin loans to purchase JD Health
stock. The offering was led by units of Bank of America Corp.,
Haitong International Securities Group Ltd. and UBS Group AG.
Write to Joanne Chiu at joanne.chiu@wsj.com
(END) Dow Jones Newswires
December 02, 2020 04:13 ET (09:13 GMT)
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