JD.com announced on HKEX that it is acquiring 36.8% in total of the equity of JD Digits, along with CNY 1.78 billion overweight on June 26.
Image credit: JD Digits's official LinkedIn page
► JD.com is set to acquire a financial stake on JD Digits, along with its 40% profit-sharing right.
► This overweight by JD.com can be regarded as a speeding-up move before an IPO launch for JD Digits.
On June 26, JD.com announced an overweight of CNY 1.78 billion on JD Digits, marking a gain of 36.8% of the total equity in the company.
Since the restructuring in June 2017, the financial results of JD Digits stopped being consolidated in JD.com’s books, after the latter sold all its shares in JD Digits. Through the transaction, JD.com acquires 40% of the profit-sharing right, which can be converted to 40% of shares of the company at maximum. Currently, the maximum right has been diluted to 35.9% because of the new financing round in 2018 and some expansion on the equity-based incentive plan.
Along with JD.com increasing its stake with the CNY 1.78 billion cash on JD Digits, the total shareholding will reach 36.8%, which pushes the market capitalization of JD Digits to nearly CNY 200 billion.
Through this transaction, JD.com goes back to the shareholder list of JD Digits.
Moreover, JD Digits changed its name from limited liability corporation to incorporated corporation, marking high liquidity on shares, stronger ability in attracting capitals, and the right to raise the money form the public.
JD Digits was formerly known as JD Finance – the Beijing-based digital technology unicorn company, with business layouts in AI, robots, digital marketing, smart city and fintech fields. The company closed round-A financing in 2016 and was valued at CNY 50 billion, then finished round-B finance in 2018 with the valuation of around CNY 120 billion.
The series of moves shows an increasing pace for JD Digits in launching the stock market, which has been a rumor in the market for a while.
Witnessing a significant increase in valuation from CNY 50 billion to CNY 200 billion now, we are expecting to see a 'pre-unicorn' to go public in the near future.