Virtual medical service JD Health raised $3.5 billion through a Hong Kong initial public offering priced late Thursday at HK$70.58 ($9.1) a share, according to reports by Bloomberg News.
This makes it the second largest Hong Kong initial offering this year behind parent company JD.com's $4.5 billion secondary listing in June and comes as governments, investors and the public look for socially distant ways to seek health care.
"Almost a third of shares [were] already effectively presold to very high quality cornerstones, which [brought] a lot of confidence to the wider universe of investors," equity markets analyst Philippe Espinasse told Business Times in an interview.
Parent company JD.com will retain a 78% stake and a listing on the HKEx main board is likely to take place Tuesday.
Launched in 2016, the online portal first launched as a way for users to consult with doctors from their phones and a year later the company branched out into pharmaceuticals.
These are two services in high demand during a pandemic - unsurprisingly, JD Health's revenue doubled to reach $1.34 billion in the first six months of 2020 compared to the same time last year.
The listing's popularity was likely also stoked in part by delays to the Ant Group initial public offering, which has left "an awful lot of money looking for a home," Espinasse added.
JD.com's decision to spin off its health branch echoes the route taken by other Chinese e-commerce conglomerates, including Ping An-backed Good Doctor app which raised $1.12 billion during its 2018 initial public offering, Tencent's Wechat-hosted Trusted Doctor platform and Alibaba's eponymous health service.
Their business paths were hardly lockstep though, given that Ping An, Tencent and Alibaba all had a several year head start in the health care space.
JD Health CEO Lijun Xin addressed this in an open letter to employees earlier this year, noting that "starting the business late allows us to see the pattern of the industry and the pain points more clearly."
The demand for virtual medical services is unlikely to wane anytime soon.
"Online providers offer a faster and better way to cope with the increasing demand for health care services," Credit Suisse analysts in a 2019 report on China's growing host of digital medical resources.
