JD.com is planning a $1 billion note offering to refinance and fund general operations, according to a filing to the US Securities and Exchange Commission on Tuesday.

Why it matters: The Beijing-based e-commerce company is joining other domestic tech firms in seeking out cheaper capital as China’s economic slowdown continues. Alibaba’s blockbuster $13 billion secondary IPO in Hong Kong set a precedent for its peers.

  • JD raised $1 billion in its 2016 debut on the global bond market. The first five-year $500 million tranche offered at a 3.125% rate will be due in around a year.
  • US-listed Chinese tech firms including search engine Baidu, online travel booking platform Trip.com, and gaming firm Netease are reportedly proceeding with secondary listings in Hong Kong.
  • In addition to Alibaba, rival e-commerce platform Pinduoduo raised new capital with its $1 billion convertible debt offering in September.

CHINA VOICES | JD’s vision of the future

Details: The public offering consists of $700 million of 3.375% notes due in 2030 and $300 million of 4.125% notes due in 2050, according to the filing.

  • The notes are expected to be listed on the Singapore exchange.
  • The company expects to receive net proceeds from the offering of approximately $988.3 million, after deducting underwriting discounts, commission, and expenses.
  • Bofa Securities and UBS are joint book runners for the deal.

“As Alibaba and Tencent have been actively expanding their ecosystems, issuing $1 billion notes gives JD more financial flexibilities and lowers its cost of capital; It puts the company at a stronger financial position to acquire new businesses.”

—Deborah Weinswig, analyst at research institute Coresight Research, in written response to TechNode

Context: JD recorded net revenue of RMB 134.8 billion ($18.9 billion) in the third quarter of 2019, an increase of 28.7% year on year and the highest quarterly growth for the past five quarters.

  • The company is reportedly in early discussions with banks for an overseas listing of its logistics affiliate, JD Logistics.
  • Founder and CEO Richard Liu last year stepped down from a series of top management roles at the company’s subsidiaries last year.

Updated: included additional information about the company’s 2016 bond offering and analyst comment.

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via lixin@sixthtone.com or Twitter.

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