“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,” WSJ writes.
A Lofty Debut: JD Health International operates China’s largest online retail pharmacy, in addition to other health-care services. Strong demand prompted the company to price its offering at the higher end of the range, which has proven successful early on.
- The IPO could reach $4 billion if underwriting banks exercise additional options after trading begins.
- Based on these numbers, JD Health has a valuation of $28.5 billion.
Hong Kong is experiencing an IPO boom, not unlike the growing numbers in the U.S. This year, more than 120 companies have raised $44.6 billion through public offerings and secondary listings on the Hong Kong exchange.
- It’s the highest total since 2010, when the city notched $68 billion from newly listed companies, according to Dealogic.
“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,’ Jie Lu, head of investments for China at Robeco, said.”
Position Solidified: With tensions strained between the U.S. and China and American policymakers cracking down on New York-listed Chinese companies, Hong Kong is continuing to solidify its status as a “major capital raising hub for Chinese companies.”
- The majority of Hong Kong’s more than $5 trillion stock-market capitalization comprises Chinese companies.
Back To JD’s Future: “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.”
I will add this to the list of Chinese stocks to assess once it IPO’s. We generally like owning some large, transformational, and high-growth Chinese tech businesses to gain exposure to the Chinese economy and diversify away from the U.S. a bit.