Chinese e-commerce giant JD.com Inc revealed plans on Thursday to spin off its property and industrial divisions, aiming to list them on the Hong Kong Stock Exchange. This move comes amidst the latest wave of restructuring within the Chinese technology sector following a stringent regulatory crackdown.
JD.com stated that it will retain a stake of over 50% in both units, JD Industrials and JD Property, upon the completion of the proposed spin-off. The company's U.S.-listed shares experienced a 6% increase following the announcement, despite losing more than a third of their value over the past two years due to Beijing's clampdown on the tech sector.
Earlier this week, rival Alibaba Group announced its plan to divide into six units and explore fundraising or listings for most of them, marking the most significant restructuring in the company's 24-year history.
JD.com has not yet finalized the size and structure of its units' initial public offerings. However, in listing prospectuses filed on Thursday, JD Industrials and JD Property reported annual revenues of 14.1 billion yuan ($2.05 billion) and 2.3 billion yuan, respectively.
This announcement is not JD.com's first attempt at restructuring. In 2017, the Beijing-based company spun off its logistics unit into a separate entity and subsequently opened its delivery and warehousing services to third-party firms.
JD.com's business has faced challenges in recent quarters due to strict COVID-19 restrictions imposed by Beijing, which negatively impacted consumer confidence. In January, the company announced plans to wind down its e-commerce operations in Indonesia and Thailand, where it faced strong competition from Sea Ltd-owned (SE.N) Shopee.
BofA Securities, Goldman Sachs, and Haitong are sponsoring the units' IPOs. UBS and Citic Securities are serving as financial advisers for JD Industrials, while UBS is the financial adviser for JD Property.
