China's largest local on-demand retail service provider Dada Nexus has announced the official terms of its initial public offering (IPO) in New York. The listing comes at a politically precarious time as the tensions between China and the US continue to escalate but the company is adamant in pushing ahead with its plans.
On Monday, Dada Nexus announced that it will be selling a total of 16.5 million American Depository Shares (ADS) set a price range of between $15 and $17 per share. At the upper end of the range, the company could potentially raise up to $280 million during its IPO. The company's shares will be listed on the NASDAQ under the ticker symbol "DADA." The IPO will be underwritten by BofA Securities, Jeffries, and Goldman Sachs.
The Chinese firm acknowledged in its IPO filing that there will be some inherent risks involved in its decision to launch its listing at this time. The company stated that the escalating tensions could cause "investor uncertainty" and there may be a possibility of it being delisted if the situation worsens.
For now, the company revealed that it had received a lot of positive feedback and interest from investors regarding its listing. Existing shareholders Walmart and JD.com have both expressed interest in purchasing the company's US stocks. Walmart reportedly plans to purchase around $30 million worth of its shares, while JD plans to buy $60 million worth.
Market experts have mostly rated the IPO as "Neutral," with some analysts pointing to the listing's price range being overpriced given its current operating losses and high cash burn. Over the past quarters, the company has managed to greatly reduce its operating losses, while at the same time increase its revenues.
As per its regulatory filing, the company plans to use around 40 percent of the IPO's net proceeds to fund its marketing initiative and grow its user base. This will include funding its expansion plans to make its service available to more low-tier Chinese cities. Around 35 percent of the proceeds will be used to make investments in new technologies, while the rest of the money will be used for general corporate purposes.
Dada Nexus, which was founded in 2014, operates a number of online on-demand services in China through its various platforms. The company's offerings include its Dada Now and JDDJ delivery and marketing services for merchants, brands, retailers, and consumers.
The company's platform caters to more than 27.6 million active users, with its local intra-city services available in more than 700 cities and counties across China. Dada Nexus also offers last-mile delivery services to more than 2,400 Chinese cities and counties.
