Exclusive: Jingdong targets US$1b in private capital after IPO delay

Investment banks said to be pitching investors to raise more than US$1 billion for 'China's Amazon'

PUBLISHED : Wednesday, 15 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 10:37am

Top online retailer Jingdong Mall, often dubbed China's Amazon.com is trying to raise more than US$1 billion from institutional investors, after the company was forced to delay its long-awaited listing plan this year.

People in the financial and technology industries who are familiar with the talks told the South China Morning Post that several investment banks, including Bank of America-Merrill Lynch and JPMorgan, have been quietly trying to line up potential investors for Jingdong in recent months. No deal has been inked yet.

China Investment Corp (CIC), the mainland's US$300 billion sovereign wealth fund, is among several potential investors that have been pitched by the investment banks advising Jingdong, said the people, who declined to be identified because the fund-raising efforts are private.

"Jingdong definitely needs more money to continue its fast business expansion on the mainland. Since its IPO plan will not come out any time soon, it now considers private fund-raising as Plan B," said one person, referring to Jingdong's original initial public offering (IPO) plan for the Nasdaq stock market in the US.

Initially a distributor of consumer electronic goods, Jingdong ventured into online retailing in 2004 and expanded into books, furniture, apparel, cosmetics, food and beverages and infant products. According to its corporate website, it has 20 million registered users and 1,200 suppliers. It has become a market leader by selling branded goods at lower prices than traditional brick-and-mortar retailers, but has yet to turn a profit.

Jingdong has said it wants to improve its logistics and deliver goods faster to its far-flung clients, including adding more warehouses and service outlets, which is costly. Some analysts have warned that the expansion plan may be too aggressive, and could put pressure on its finances.

If the current capital-raising talks succeed, it would be Jingdong's fourth, and most likely the last, round of private funds before it goes public. In early 2011, in a third round, it raised about US$1.5 billion from global investors such as Tiger Fund and Digital Sky Technologies (DST). Russia-based DST also invested in Facebook.

Early-stage investors who injected capital into Jingdong in the first and second rounds of private fund-raisings include international and Chinese private-equity firms such as Bull Capital and Sequoia Capital.

Beijing-based Jingdong had planned to raise about US$5 billion from an IPO this year. But it postponed the IPO until next year, mainly because of weak market conditions.

CIC recently received an investment proposal for a stake in Jingdong, said another person, adding CIC was cautious about the sales pitch. Jingdong was not available for comment. CIC earlier this year agreed to invest in Alibaba Group, the world's largest business-to-business e-commerce firm, which runs Taobao.com - another online retailer that competes with Jingdong.