/JD Health shares surge 34% on their market debut in Hong Kong

JD Health shares surge 34% on their market debut in Hong Kong

A woman stands next to signage incorporating the logo of JD.com, and the company’s mascot ‘Joy,’ at the company’s headquarters in Beijing, China.
Qilai Shen | Bloomberg | Getty Images

GUANGZHOU, China — Shares of JD Health, the health-care arm of Chinese e-commerce giant JD.com, surged on their debut in Hong Kong.

JD Health issued 381.9 million shares pricing them at 70.58 Hong Kong dollars each. Those shares were trading at 94.5 Hong Kong dollars at the market open. That is 34% higher than their offering price.

The company said net proceeds from the initial public offering (IPO) were 26.46 billion Hong Kong dollars ($ 3.41 billion).

JD Health’s shares were priced at the top end of the 62.8 Hong Kong dollars to 70.58 Hong Kong dollars marketed to investors, CNBC previously reported.

The investment banks could decide to exercise the so-called over-allotment option whereby 57,285,000 more shares would be issued. That would result in an additional 3.98 billion Hong Kong dollars being raised from the IPO. The over-allotment must be exercised by Dec. 31.

JD Health said 40% of the net proceeds will go toward business expansion over the next 3 to 5 years, 30% will be used for research and development in the next 2 to 3 years, while the remaining money will be spent on potential investments and acquisitions and general corporate purposes.

The company’s business is focused on online health-care services such as consultations with doctors as well as its online pharmacy. JD Health brought in revenue of 8.78 billion yuan ($ 1.34 billion) in the six months ended June 30, up from 4.99 billion yuan in the same period last year.

JD Health’s listing is another major win for the Hong Kong stock exchange which has seen major Chinese firms head there to raise money. JD Health’s parent company, JD.com, carried out a secondary listing in Hong Kong in June. Another Chinese internet firm NetEase also pulled off a secondary listing in Hong Kong that same month.

China’s technology giants have sharpened their focus on digital health care following the coronavirus outbreak earlier this year. Internet search giant Baidu is in discussions with investors to raise up to $ 2 billion over three years for a new biotech company, CNBC reported in September.

JD.com will remain the controlling shareholder of JD Health even after the IPO. There are a number of so-called cornerstone investors that were brought on board including Hillhouse, Tiger Global, Lake Bleu Prime, China Structural Reform Fund, Blackrock and Singapore’s sovereign wealth fund GIC.

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