Chinese e-commerce giant JD.com is reportedly set to price its secondary listing in Hong Kong at around HK$226 per share. Based on the price revealed by reports citing sources close to the deal, JD.com could raise as much as $3.88 billion from the share sale.
If the company does manage to reach its target, which it might given the high demand for its shares in the city, JD.com's listing could become the largest share sale in Hong Kong so far this year. At its reported share price, JD.com will overtake NetEase's secondary listing, which was launched on Thursday.
Sources familiar with the deal revealed that JD.com's listing is currently oversubscribed by multiple times. The purported price of its Hong Kong shares is about 3.9 percent cheaper than its share prices at the NASDAQ, which closed at around $60.70 per share on Thursday.
JD.com's secondary listing in Hong Kong is scheduled to begin trading on June 18. The company's Hong Kong shares will be mutually interchangeable with its American depositary receipts (ADRs) at a ratio of two ordinary shares to one ADR. JD.com has the option of executing an overallotment option, which would increase its share sale size by up to $4.46 billion. Advising JD.com on its listing are UBS, CLSA, and the Bank of America.
Last month, JD.com had stated that it plans to use the proceeds of its new share sale to expand its logistics network. It added that part of the funds will also be used to support the growth of its online presence and bring more merchants online.
NetEase, the world's second-largest mobile games published, had managed to raise around $2.7 billion during its Hong Kong debut. Both JD.com and NetEase are currently listed in the US. Their decision to sell their shares domestically comes amid rising tensions between China and the US, which has resulted in some investor discrimination towards Chinese stocks on Wall Street.
The US Senate recently approved a new bill, which effectively increased the country's scrutiny of Chinese firms listing in the country's exchanges. Chinese ADRs are now being subjected to comprehensive auditing, discouraging some Chinese firms from listing in the country.
In order to attract more Chinese firms to list at home, Hong Kong had implemented sweeping changes to its policies. This gave Chinese firms additional funding options, which most now expressing interest in launching a secondary listing in the city.
According to data from Bloomberg, more than 200 Chinese companies, worth a combined $1.2 trillion, are listed in US stock exchanges. Around 32 of those companies listed are eligible to list their stocks in Hong Kong.
