JD.com's logistics unit is in talks with banks for what may be one of Hong Kong's most anticipated initial public offers of 2021

The logistics unit of China's second-biggest e-commerce platforms has invited investment banks to submit proposals for an initial public offering (IPO) in Hong Kong, becoming the latest arm of JD.com's stable of companies to tap the stock market for capital.

Multiple banks have submitted proposals to help JD Logistics raise capital, eager to work on what is likely to be one of the largest equity sales in 2021, according to a person familiar with the process, declining to be named. Reuters reported the IPO could raise US$3 billion, although bankers said it's still too early in the process to put a value on the fundraising.

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JD Logistics was created in April 2017 as a separate business unit under JD.com, using the company's widespread fulfilment network to provide integrated supply chain and logistics services to third party companies, including warehousing, transport, delivery and after sales services. It also provides logistics technology such as cloud-based services and data analytics to third-party clients.

Workers sort out packages for delivery at JD's Yizhuang Smart Delivery Station in Beijing on November 11, during the Singles' Day shopping festival. Photo: Simon Song alt=Workers sort out packages for delivery at JD's Yizhuang Smart Delivery Station in Beijing on November 11, during the Singles' Day shopping festival. Photo: Simon Song

JD Logistics' prowess was on display during Singles' Day, the world's largest shopping extravaganza, when shoppers rang up bills worth a record 271.5 billion yuan (US$41.4 billion) between November 1 and 11 on JD.com. JD Logistics competes with Cainiao, the logistics unit of this newspaper's owner Alibaba Group Holding.

JD Logistics operated more than 800 warehouses in China, with an aggregate gross floor area of about 20 million square metres (215.3 million square feet) as of September 30.

Since October 2018, JD Logistics has delivered parcels to consumers within city limits and across China. It also has an agreement with China Railway Corporation to use the country's high-speed train network for same-day delivery of high-end goods across China, with JD Luxury Express making the last- mile delivery.

Logistics and other services have steadily accounted for larger portion of JD.com's revenue, from 1.4 per cent in 2017, according to JD.com's most recent annual report. Revenue from logistics and other services rose to 23.5 billion yuan last year, or about 4.1 per cent of JD.com's total revenue. Logistics and other services jumped 73 per cent to 10.4 billion yuan in the third quarter, about 6 per cent of its overall revenue in the period.

JD.com's driverless delivery vehicles. Photo: AFP alt=JD.com's driverless delivery vehicles. Photo: AFP

In August, JD Logistics said it would roll out 100 unstaffed vehicles in Changshu city in Jiangsu province and have up to 100,000 of the "autonomous robots", which look like minivans, on the nation's streets within five years. The company raised US$2.5 billion from third-party investors by issuing Series-A preferred shares in 2018, giving them about 19 per cent of the company. JD.com remains the logistics unit's controlling shareholder.

The business is headed by Zhenhui Wang, who joined JD.com in 2010 and has served as CEO of the logistics arm since its founding in 2017. He previously served as general manager of JD.com's North China region, head of its smart devices business and head of fulfilment operations.

JD.com did not respond to a request for comment on JD Logistics' IPO plans immediately.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

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