Shares rise 34% on market debut

A woman stands next to signage with the JD.com logo and the company’s mascot “Joy” at the company’s headquarters in Beijing, China.

Qilai Shen | Bloomberg | Getty Images

GUANGZHOU, China – JD Health, the health division of Chinese e-commerce giant JD.com, rose on its debut in Hong Kong.

JD Health issued 381.9 million shares at a price of Hong Kong $ 70.58 each. These stocks traded at Hong Kong $ 94.5 at launch. That is 34% more than the offer price.

The company said the net proceeds from the IPO were Hong Kong dollars 26.46 billion ($ 3.41 billion).

JD Health’s shares were valued at the high end of the Hong Kong dollar 62.8 to Hong Kong dollar 70.58 marketed to investors, CNBC previously reported.

The investment banks could decide to exercise the so-called over-allotment option, in which 57,285,000 additional shares would be issued. That would result in raising another $ 3.98 billion in Hong Kong through the IPO. The over-allotment must be exercised by December 31st.

JD Health said 40% of net sales over the next 3 to 5 years will be used for business expansion, 30% for research and development over the next 2 to 3 years, while the remaining money will be spent on potential investments and acquisitions and general corporate purposes.

The company’s business is focused on online health services such as consultations with doctors, as well as the online pharmacy. JD Health posted sales of 8.78 billion yuan ($ 1.34 billion) for the six months ended June 30, compared to 4.99 billion yuan for the same period last year.

JD Health’s listing is another big win for the Hong Kong Stock Exchange, where big Chinese companies have gone there to raise money. JD Health’s parent company, JD.com, conducted a secondary listing in Hong Kong in June. Another Chinese internet company, NetEase, also made a secondary listing in Hong Kong that month.

China’s tech giants have stepped up their focus on digital health care following the coronavirus outbreak earlier this year. Internet search giant Baidu is in talks with investors to raise up to $ 2 billion for a new biotech company within three years, CNBC reported in September.

JD.com will remain the majority shareholder of JD Health even after the IPO. A number of so-called cornerstone investors have been brought on board, including Hillhouse, Tiger Global, Lake Bleu Prime, the China Structural Reform Fund, Blackrock and Singapore’s sovereign wealth fund GIC.