Beijing Jingdong Trading Co., the Chinese online retailer backed by Saudi Prince Alwaleed bin Talal, plans to raise about $2 billion in an initial public offering in the second half, three people with knowledge of the matter said.
The Beijing-based company is working with Bank of America Corp. and UBS AG, said the people, who asked not to be identified because the details are private. Jingdong is leaning toward a U.S. listing, although Hong Kong is another potential IPO destination, they said.
Jingdong is planning the biggest U.S. initial offering by a Chinese company in more than a decade, taking advantage of government policies aimed at bolstering e-commerce. It wants to avoid listing at the same time as a potential IPO of Alibaba Group Holding Ltd., China’s largest e-commerce company, two people said.
“The timing is good as China has unveiled policies supporting the growth of information technology-driven consumption,” said Ricky Lai, a Hong Kong-based analyst at Guotai Junan Securities Co. “More and more people in the country are shifting to online shopping from traditional ways.”
The proceeds will help Jingdong expand in an e-commerce market that will be worth $395 billion by 2015, according to McKinsey & Co. Alibaba, which has been valued at as much as $190 billion by analysts, plans to go public in 2014, people with knowledge of the matter said in October.
Chinese companies raised $907 million from first-time share sales in the U.S. last year, more than five times the amount in 2012, data compiled by Bloomberg show. 58.com Inc. (WUBA), which runs a Craigslist-like online marketplace, has jumped 146 percent since an October IPO. Qunar Cayman Islands Ltd., a Chinese travel-booking service, has gained 89 percent since listing in November. The Bloomberg China-US Equity Index of the most traded Chinese stocks in the U.S. has gained about 26 percent from a low last June.
A Jingdong spokesman declined to comment on the IPO plans yesterday.
The company was founded by Chief Executive Officer Richard Liu in 2004. Its offering will be the biggest by a Chinese company in the U.S. since China Life Insurance Co. (LFC), the nation’s largest insurer, raised $3.3 billion in December 2003.
Online retailing in China grew at an average 120 percent each year from 2003 to 2011 and is projected to more than triple to $395 billion from 2011 to 2015, according to a McKinsey report in March. China has 591 million Internet users, more than the entire population of any other country except India, according to the government-run China Internet Network Information Center.
China could have more than 850 million Internet users by 2015, according to the Ministry of Industry and Information Technology. E-commerce transaction volume could reach 18 trillion yuan, and online could account for more than 9 percent of total retail consumption, the ministry said.
Billionaire Alwaleed bought a stake in Jingdong in February last year, joining a group of investors in tapping one of the world’s fastest growing e-commerce markets. Jingdong raised about $700 million from the Alwaleed-controlled Kingdom Holding Co., Canada’s Ontario Teachers Pension Plan and some existing major shareholders, the company said at the time.
Other backers include billionaire Alisher Usmanov, who invested in Twitter Inc. and Facebook Inc. ahead of their listings and is also a shareholder of Alibaba. Usmanov, Russia’s richest man, expects “at least double returns” from his Jingdong investment, the chief executive officer of his holding company said in June.
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