JD Logistics, the logistics arm of Chinese online retailer JD.com, is in early discussions with banks about raising $8 billion to $10 billion through an overseas initial public offering (IPO), Reuters reported on Monday.

Why it matters: JD Logistics, with its assets in supply chain, logistics, and warehouses, is one of the most valuable properties of the Chinese e-commerce giant. The possible IPO could come as the company continues to open its delivery and warehousing services to third-party companies in a bid to commercialize its delivery capacities.

  • The once-loss making unit saw growing momentum this year. The logistics company expanded its third-party businesses with external revenues accounted for nearly 40% of its total revenues in the third quarter.
  • JD founder and CEO Richard Liu stepped down as manager of a Xi’an-based unit that wholly owns JD Logistics on December 5th. He still holds a substantial 45% indirect stake in the subsidiary.

JD readies for life after Richard Liu

Details: The possible IPO is expected to value the company at $30 billion at least, Reuters reported, citing a source who declined to be named.

  • The company is expected to select banks for the IPO in the second quarter of next year. The final debut could take place in the second half of 2020, the source added.
  • The listing destination hasn’t been decided yet. Hong Kong and New York are possible choices, the source told Reuters.
  • The funds will be used for warehouse expansion and potential acquisitions.
  • A representative of the firm declined to comment on the matter when asked by TechNode.

Context: The Chinese e-commerce tycoon spun off its logistics arm into a standalone business in April 2017, pivoting from an internal department into an express delivery company servicing both consumers and enterprises.

  • The unit raised $2.5 billion in February 2018 from a range of backers including investment firm Hillhouse Capital, China Development Bank Capital, as well as Tencent.
  • The transaction, which was JD Logistics’ first outside funding event, valued the company at around $13.5 billion.
  • JD Logistics raised $218 million in an RMB-dominated industrial fund this June to invest in startups.
  • As of June 30, 2019, the online retailer operated approximately 600 warehouses.
  • The total warehouses covered an aggregate gross floor area of over 15 million square meters, including approximately 2.5 million square meters managed under the JD Logistics Open Warehouse Platform.

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.

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