UPDATE 3-Shares of China's JD.com climb in U.S. market debut

Thu May 22, 2014 3:38pm EDT

(Adds trading ticker symbol in paragraph one)

By Tanya Agrawal

May 22 (Reuters) - Shares of Chinese e-commerce firm JD.com Inc soared almost 20 percent in their U.S. market debut as investors sought a piece of the country's booming online retail market, auguring well for Alibaba Group Holding Inc's hotly anticipated mega-float later this year.

JD.com, China's largest e-commerce company after larger rival Alibaba, was briefly valued at more than $30 billion before the stock pared its gains. By midday, the stock was up about 8 percent at $20.50, versus its $19 initial public offering price.

While JD.com's IPO is the biggest yet by a Chinese company in the United States, the offering is widely expected to be dwarfed later this year when Alibaba launches what some believe will be the biggest IPO by a tech company in history.

"The momentum seems to be moving in the right direction for Alibaba," said Rett Wallace, chief executive of Triton Research, which analyzes startup companies.

Wall Street's appetite for Chinese technology stocks recovered in 2013 after a series of accounting scandals in 2011 resulted in a sharp fall in listings.

Until JD.com's IPO, seven Chinese companies had gone public in the United States this year, raising $1.21 billion. In all of 2013, eight Chinese companies raised about $884 million.

Chief Executive Officer Richard Liu said in a Thursday interview that the company was keeping a lookout for acquisition opportunities in the e-commerce space and focused on expanding in its booming home market.

CHINA'S AMAZON

JD.com, which has never made a profit, is often compared to Amazon.com, which sells directly to consumers, while Alibaba is often likened to eBay Inc, which mainly facilitates sales between members.

China's business to consumer e-commerce sales may surpass $180 billion this year due to rising Internet usage, expanding middle-class incomes and improving distribution networks, New York-based market research firm eMarketer estimates.

JD.com had an 18.3 percent share of that market as of the third quarter of 2013, according to Beijing-based iResearch. It claims some 30 million-plus active customers and saw net revenue jump 70 percent to $8 billion in 2013's first nine months.

But it still operates in the shadow of Alibaba, which commands an 80 percent share of an e-commerce market.

The company posted a loss of $8 million in 2013 and warned that it "may incur net losses for some time in the future" as it invests in warehouses and delivery vehicles.

JD.com's founder and CEO, Liu, retains control of almost 84 percent of the voting power in the company. He was awarded a one-off share-based bonus worth $891 million at the IPO price, raising questions about governance and shareholders' rights.

On Thursday, Liu said the company's investors, which include Tiger Global, Saudi billionaire Prince Alwaleed bin Talal's Kingdom Holding Co and Hillhouse Capital, backed that one-time award given JD.com's decade-long ascent.

(Reporting by Tanya Agrawal in Bangalore; Editing by Ted Kerr and Tom Brown)