Chinese e-commerce firm JD.com Inc's (JD.O) has priced it U.S. IPO above the marketing range to raise $1.78 billion, pointing to strong demand for bigger rival Alibaba Group Holding Inc IPO-ALIB.N upcoming mega float.
Loss-making JD.com, backed by Saudi billionaire Prince Alwaleed bin Talal's Kingdom Holding Co 4280.SE, is set to debut on Nasdaq on Thursday in what would be the biggest listing of a Chinese company in the United States.
China's No. 2 e-commerce company priced its American Depositary Shares (ADS) at $19.00 each, above the $16 to $18 per ADS indicated range, valuing the company at more than $25 billion, according to its underwriters.
Investors are watching JD.com, hoping for clues as to how Wall Street will receive its much larger peer. Alibaba has filed for what some expect could be the largest initial public offering by a technology company to date.
JD.com, which has forged a close partnership with Alibaba arch-rival Tencent Holdings Ltd (0700.HK), will raise $1.31 billion from the sale of 69 million ADS.
It would raise another $1.31 billion by issuing shares to Tencent, JD.com said in a statement. JD.com and Tencent agreed to merge their e-commerce operations in March and as part of that deal, Tencent agreed to subscribe to JD.com shares.
The 10-year-old company, the biggest direct seller of online goods in China, will remain tightly controlled by founder and CEO Richard Liu after the IPO, through special shares that grant him extra voting rights.
JD.com awarded billionaire Liu a one-off bonus as the company prepared for its IPO, booking share-based expenses of $591 million, according to a securities filing. The award was worth $891 million at the IPO price.
CHINESE TECH STOCKS
Investor appetite for Chinese technology stocks recovered in 2013 after a series of accounting scandals dried up U.S. listings in 2011 from a high of 40 in 2010.
This year, investors have driven down valuations of tech stocks, including that of Amazon.com (AMZN.O), but many on Wall Street expect a stellar debut from Alibaba, which controls some 80 percent of all online Chinese commerce.
China's business to consumer e-commerce sales may pass $180 billion this year due to rising Internet usage, expanding middle-class incomes and a better distribution network, according to New York-based market research firm eMarketer.
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.
The selling shareholders including CEO Liu, Tiger Global Management, Hillhouse Capital Management, DST Global funds, Capital Today would pocket $468 million.
Formerly known as 360Buy, JD.com has already raised more than $2 billion in previous years from investors including the Ontario Teachers' Pension Plan and Kingdom Holding.
Bank of America (BAC.N) and UBS AG UBSN.VX were the lead underwriters for the IPO.
(The story corrects size of Liu's one-time share award in 8th paragraph.)
(Writing by Edwin Chan; Editing by Sriraj Kalluvila, Ken Wills and Stephen Coates)