JD.com’s healthcare unit to raise $1b from Baring PE Asia, others

Photo by Hush Naidoo on Unsplash

Chinese e-commerce major JD.com is raising over $1 billion for its healthcare subsidiary JD Health from investors including CPEChina Fund, CICC Capital and Baring Private Equity Asia.

The Chinese tech giant on Friday announced that it entered into definitive agreements on May 9 for non-redeemable Series A preferred share financing for JD Health. The shares on offer represent over 14.5 per cent of equity interest in JD Health on a fully diluted basis.

JD.com will remain the majority shareholder of the healthcare unit upon completion of the transaction, it said.

“The new financing will enable JD Health to further expand its core business, attract industry talent and explore new initiatives in the broader healthcare sector,” the company added.

JD.com is reinforcing its ecosystem by adding a sector that the BAT giants have heavily invested in, to its existing services of finance, insurance and medical commerce.

The Chinese firm also revealed that it has renewed its strategic partnership with Tencent, which will see the WeChat platform continue to offer access points to provide traffic support, as well as other cooperation in communications, advertising and membership services, among others. These activities are estimated to cost over $800 million, which will be paid over the next three years.

JD.com said it will issue $250 million of Class A ordinary shares to Tencent during the three-year period.

The company’s net revenues in the first quarter of 2019 stood at around $118 billion, up 20.9 per cent year-on-year. Income from operations in the period was 1.2 billion yuan ($0.2 billion), a big difference compared to 4.4 million yuan in the first quarter of 2018.

Annual active customer accounts increased to 310.5 million in the twelve months ended March 31, 2019, with quarterly active customer accounts in the first quarter of 2019 increasing 15 per cent year-on-year.

“The first quarter saw solid top line growth with record breaking profitability, further demonstrating the superiority of JD.com’s business model as compared to traditional retail formats,” said Sidney Huang, CFO of the company.

JD.com expects net revenues for the second quarter of 2019 of 145-150 billion yuan, representing a growth rate of 19-23 per cent year-on-year.

“We will continue to invest in key technologies and top industry talent as we work to reach an even broader customer base through cutting edge innovation,” said Richard Liu, chairman and CEO of JD.com.