Dada Nexus, known as JD Daojia in China, filed its application on Tuesday with the US securities regulator to offer shares on the Nasdaq stock exchange.
Why it matters: JD Daojia’s filing for an initial public offering (IPO) on a US exchange bucks the current trend among Chinese US-listed firms, which have shown increased interest in Hong Kong listings. Led by Alibaba, the country’s tech giants currently favor the Hong Kong market amid escalating US-China tensions and concerns over fraud.
- The move highlights the company’s confidence in China’s on-demand grocery delivery market, which surged during China’s country-wide lockdown that began in February, sequestering millions at home to avoid spreading the virus.
Details: In its filing, the company uses a placeholder amount of $100 million as a fundraising target. A source cited by tech media outlet The Information said in August that the IPO was expected to raise $500 million.
- JD Daojia partners with more than 89,000 stores, serving 27.6 million active customers in more than 700 Chinese cities with delivery services for fresh groceries, flowers, medicine, beauty, household items, and other products.
- In 2019, net revenue reached RMB 3.1 billion ($437.8 million), growing around 60% year on year, according to the company’s prospectus.
- Net revenue for the first quarter of 2020 more than doubled to RMB 1.10 billion from RMB 526.5 million in the same period a year ago.
- The company is still loss-making, though net losses narrowed 20% year on year to RMB 279.3 million in Q1 2020 from RMB 336.9 million in Q1 2019.
- Goldman Sachs, BofA Securities, and Jefferies are joint bookrunners on the deal.
Context: JD Daojia raised $500 million from Walmart and JD.com in 2018.
- The company is a grocery delivery joint venture between e-commerce platform JD.com and on-demand delivery platform Dada.
- JD.com, JD Daojia’s largest shareholder with a 51.4% stake, is reportedly planning for a secondary listing on the Hong Kong exchange.
- The company is in competition with with Meituan, Alibaba’s Ele.me, and Dingdong Maicai.