American investors are hungry for a Chinese Internet company, and it isn’t the Alibaba Group, China’s e-commerce giant. Instead, JD.com, an online retailer aspiring to become that country’s answer to Amazon.com, exceeded expectations for its initial public offering on Wednesday, raising $1.78 billion, DealBook’s Michael J. de la Merced writes. Even though the company has lost money for the last several years, its stock sale valued the company at $25.7 billion. Shares in JD.com will begin trading on the Nasdaq stock exchange on Thursday under the symbol JD.
Chinese companies like JD.com and Alibaba have drawn intense interest because they offer shareholders a way to tap China’s enormous growth. Indeed, though JD.com is coming to market at a time when the pace of technology I.P.O.s has slowed significantly, the number of orders for the retailer’s stock was said to have been 15 times oversubscribed. Much of the company’s appeal lies in the relatively unconquered Chinese e-commerce market.
Investors have directly compared JD.com to Alibaba, but the two operate differently. For one, JD.com maintains a significant amount of product inventory and owns much of its shipping and logistics network, whereas Alibaba serves primarily as a middleman between customers and sellers. In addition, Alibaba’s is a much less expensive operating model that gives the company its significant margins. By contrast, JD.com has reported a loss in each of the last five years, even as its sales have increased significantly.
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Sydney Ember, New York Times via CHINA US Focus http://ift.tt/1i81yP8
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