JD.com’s logistics arm aims to raise $1.1 billion from new shares

JD Logistics on Thursday announced it plans to raise $1.1 billion from a $700 million share placement with its parent company JD.Com plus a $400 million primary capital raising.

The logistics arm of JD.com is offering shares at HK$20.3 to HK$21.15 per share, a discount of 8% to 11.7% from Thursday’s closing price of HK$23 per share.

JD Logistics proposes to conduct a placing of new ordinary shares for an aggregate amount of up to approximately $400 million. In addition, JD.com intends to enter into a subscription agreement with JD Logistics concurrently to subscribe for new ordinary shares to for a total purchase price of up to approximately $700 million in cash. The two proposals are both subject to market conditions, and are not inter-conditional, said the company.

China’s logistics industry is experiencing a consolidation period, and leading players are accelerating mergers and acquisitions of small and medium ones. JD.com, being China’s second-largest e-commerce platform, has sped up the acquisition of other logistics companies to try to reinforce its freight and warehousing network.

Most recently, the long-time Alibaba rival announced its newest purchase in which its subsidiary JD Logistics acquired a 66.5% stake in the domestic courier Deppon Logistics for close to 9 billion yuan ($1.417 billion)

According to JD.com’s latest earnings report, revenue from its logistics business rise by about 28% in the quarter. As of December 31, 2021, JD Logistics operated over 1,300 warehouses, which covered an aggregate gross floor area of over 24 million square meters, including space in cloud warehouses managed under the JD Logistics Open Warehouse Platform. By leveraging its strengths in supply chain and fulfillment, the company launched JD Sourcing on Shopify for cross-border sellers in January.

The logistics service provider reportedly has served more than 190,000 enterprise-level customers, involving industries such as fast-moving consumer goods, apparel, home appliances, furnishing, digital products, automobiles, and groceries.