JD.com Inc., a Chinese online retailer whose business model is similar to Amazon.com Inc.'s, raised $1.78 billion in its US initial public offering after pricing the shares above the marketed range.
JD.com sold 93.7 million American depositary receipts for $19 each, according to a statement distributed by PR Newswire. The Beijing-based company is selling shares to Tencent Holdings Ltd. (2988), Asia's largest Internet company, valued at $1.3 billion. The shares will start trading today, listed on the Nasdaq Stock Market under the symbol JD.
The offering is the largest ever of a Chinese Internet company listing in New York, according to data compiled by Bloomberg. Investors are seeking to capitalise on growth in China, where revenue from e-commerce will increase 64 percent this year, compared with 12 percent in the US, according to projects by digital research EMarketer Inc.
At the offering price, JD.com's market value is $26 billion, or 2.3 times last year's sales of $11.5 billion, according to data compiled by Bloomberg. That compares with Amazon's 1.9 and is cheaper than EBay Inc.'s multiple of about 4, according to data compiled by Bloomberg. JD.com hasn't posted an annual profit.
Larger Chinese e-commerce company Alibaba Group Holding Ltd. filed to go public this month in the US, for an IPO expected in 2014. JD.com's performance is a good sign for Alibaba given that JD.com has lost money for three consecutive years on an operating and net basis.
"JD.com's IPO is definitely a positive for Alibaba. Alibaba is basically the last large-scale company that is waiting to list in this round of IPO wave," Li Yujie, an analyst at RHB Research Institute Sdn. in Hong Kong, said by phone today. "Alibaba has a much larger market share than JD.com, if it manages to maintain a growth rate of 50 percent then its valuation could be lifted again."
Li says Alibaba, which reported profit more than doubled to $1.35 billion in the three months ended December, could be valued at $200 billion in the upcoming IPO.
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