Chinese e-commerce firm JD.com announced on March 30 that it is planning to spin off its property and industrial units and list them on the Hong Kong stock exchange. JD.com would hold more than 50% of Jingdong Property Inc and Jingdong Industrials Inc after the completion of the spinoffs.
According to a report by Chinastartmarket, Jingdong Property made adjustments to its CFO and CHO in December 2022. Additionally, there were several personnel changes at Jingdong Industrials which may be indicative of preparations for an IPO.
Jingdong Property and Jingdong Industrials have both successfully completed round B financing in the past. JD Industrials raised $300 million in its round B financing, which was jointly led by Mubadala and 42XFund. The funding was followed by investments from M&G, BPEA EQT under global private equity giant EQT, and Sequoia Capital China. On the other hand, Jingdong Property’s round B financing amounted to $800 million and was invested jointly by Hillhouse Capital, Warburg Pincus, and a leading global investment institution.
Jingdong Property is the asset management and operation arm of JD.com. It exclusively handles the development, operation, and management of warehousing and logistics facilities for JD.com. This includes all self-built projects related to these facilities. Over time, Jingdong Property has expanded its client base from logistics service providers to include other industries such as auto manufacturers like BMW, e-commerce platforms like Benlai, as well as retail companies such as Bestore Co and Yonghui Superstores.
According to the prospectus, Jingdong Property generated a revenue of 582 million yuan ($84 million) in 2020. Its revenue increased by 37.2% in 2021, reaching 798.7 million yuan and then grew at a rate of 190.3%, achieving a revenue of 2.32 billion yuan in 2022. The adjusted net profits for the same period were 2.88 billion yuan, 22.4 billion yuan and 31.1 billion yuan respectively.
As of December 31, 2022, Jingdong Property’s total asset management scale was valued at 93.7 billion yuan with approximately 23.3 million square meters being its total construction area.
Jingdong Industrials is an industrial supply chain technology and service provider that offers digital solutions to help customers achieve supply guarantee, cost reduction, and efficiency improvement. The company’s transaction volume in 2022 was 22.3 billion yuan with a compound annual growth rate of 38.4% from 2020 to 2022, and it has been profitable for three consecutive years. According to China Insights Consultancy’s report based on the transaction volume in 2022, Jingdong Industrials ranks first in China’s maintenance, repair and operations (MRO) market and is also the largest service provider in China’s industrial supply chain technology and service market.
JD.com‘s move comes days after rival Alibaba shared plans to split into six independent businesses, each of which can pursue funding and separate listings. The six newly-formed business units of Alibaba is: a Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, and a Digital Media and Entertainment Group. For internet giants, spin-offs can make organizational structure flatter and promote each business to form independent profitability.