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Rumor: JD.com to Spin Out Financial Services Affiliate 'JD Finance'

Yicai, 2/26/17

Chinese B2C e-commerce platform JD.com's (Nasdaq: JD) online financing and retail investment platform JD Finance will be spun off from JD.com in a privatization transaction valuing it at RMB 50 bln, reports Chinese online media outlet Yicai citing multiple sources familiar with the matter.

JD Finance, established in October 2013, completed RMB 6.65 bln Series A funding in January 2016, at a valuation of RMB 46.65 bln. Funding was led by Sequoia Capital China, Harvest Capital Management, and China Taiping Insurance Holdings (0966.HK).

According to a source close the transaction, JD Finance will complete at least one more funding round before listing on a capital market, and the company would prefer a Chinese A-shares listing. A senior executive at JD Finance said that the purpose of the privatization transaction is to add a few investors with a Chinese business background, without losing equity control, in order to obtain greater policy support and access. This would bolster the company's business development in the short term and a market listing in the long term.

According to a source at JD Finance, in 2016, the platform's total transaction volume and operating revenues grew at a rate of more than 100%, but the company is still operating at a loss. The platform hopes to achieve profitability in 2017 and to list on a capital market in three or four years.

Editor's Note: In a telephone interview with Marbridge, a JD.com investor relations spokesperson said that JD.com has no comment on this matter.

Keywords: e-commerce Internet valuation B2C JD.com financial services JD JD Finance IPO spin-off

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