China's to spin off industrial, property units in $1B Hong Kong floats

By Reuters   March 30, 2023 | 11:40 pm PT
China's to spin off industrial, property units in $1B Hong Kong floats
The logo of is seen at the China International Fair for Trade in Services (CIFTIS) in Beijing, China September 1, 2022. Photo by Reuters/Florence Lo
E-commerce firm Inc is planning to spin off its property and industrial units and list them on the Hong Kong stock exchange in deals worth $1 billion each, two people with direct knowledge said on Friday.

The plan marks the latest revamp in the Chinese technology sector after a sweeping regulatory crackdown.

In a filing on Thursday, said it would continue to hold a stake of more than 50% in the units, JD Industrials and JD Property, upon completion of the proposed spin-off. said the size and structure of its units' initial public offerings had not yet been finalized.

Two sources with knowledge of the floats said the two JD units are seeking to raise $1 billion each in the IPO. They declined to be identified as the information is confidential.

The deals would happen as soon as possible, depending on financial market conditions, one of the sources added.

U.S.-listed shares of rose 6% on the news. They lost more than a third of their value over the past two years, caught in Beijing's clampdown on the tech sector.

Rival Alibaba Group had earlier this week disclosed its own plan to split into six units and explore fundraisings or listings for most of them, marking the biggest restructuring in its 24-year history.

In their listing prospectuses filed later on Thursday, JD Industrials and JD Property disclosed annual revenues of 14.1 billion yuan ($2.05 billion) and 2.3 billion yuan, respectively.

This is not the first time has tried to reinvent itself.

The Beijing-based company spun off its logistics unit into a standalone entity in 2017 and then opened up its delivery and warehousing services to third-party companies.

Its business has struggled in the past few quarters due to strict Covid-19 curbs imposed by Beijing, which dented consumer confidence.

In January, said it was winding down its e-commerce business in Indonesia and Thailand, where it faced stiff competition from Sea Ltd-owned Shopee.

BofA Securities, Goldman Sachs and Haitong are the sponsors of the units' IPOs. UBS and Citic Securities are the financial advisers for JD Industrials, while UBS is the financial adviser for JD Property.

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