JD.com, the online retailer backed by Saudi billionaire Prince Alwaleed bin Talal, filed to raise $1.5 billion in the first Chinese initial public offering in the U.S. since a judge suspended accounting firms.
The IPO would be the biggest in the U.S. by a Chinese Internet company, data compiled by Bloomberg show. Baidu Inc., China’s largest search engine, raised $122 million when listing in New York in April 2005. The Bloomberg China-US Equity Index had slumped 6.2 percent after a U.S. administrative judge ruled Jan. 22 to ban Chinese affiliates of the four biggest accounting firms from conducting audits on the Asian nation’s companies. The measure rebounded from a five-month low yesterday.
JD.com wanted to avoid listing at the same time as a potential IPO of Alibaba Group Holding Ltd., China’s largest e-commerce company, people familiar with the matter said. With 35.8 million active customer accounts, the Beijing-based company posted $8 billion in revenue during the first nine months of 2013, according to a regulatory filing yesterday. Vipshop Holdings Ltd., a online clothing retailer, has surged 17-fold since its New York debut in March 2012.
“The institutions are hungry to participate in the Chinese consumer e-commerce market,” Francis Gaskins, president of Marina Del Rey, California-based IPOdesktop.com, which monitors initial public offerings, said by phone yesterday. “They are trying to beat Alibaba in the IPO market. They want to get there first. The question for the institutions is whether the accounting issue would be a problem for them.”
The company will sell American depositary shares and plans to use the proceeds to buy more land rights, build new warehouses, expand its distribution and make acquisitions, according to the filing.
Formerly known as 360buy Jingdong Inc., the company was renamed JD.com this month, according to its filing. Alwaleed’s Kingdom Holding Co. owns about 5 percent of the company, the filing shows. Tiger Global Management LLC has 22 percent stake. Bank of America Corp. and UBS AG are managing the offering. The figure is a placeholder used to calculate fees and may change, it said.
The China-U.S. gauge of the most-traded Chinese stocks in the U.S. added 0.9 percent to 97.73 yesterday, as companies from search engine Qihoo 360 Technology Co. to online retailer LightInTheBox Holding Co. rallied.
Chinese companies raised $907 million from first-time share sales in the U.S. last year, more than five times the amount in 2012, data compiled by Bloomberg show.
U.S. Administrative Judge Cameron Elliot ordered that local affiliates of the biggest accounting firms be suspended from auditing U.S.-listed Chinese companies for six months, triggering declines in their shares traded in New York. Even so, the eight companies that went public in the U.S. in 2013 have rallied 85 percent on average.
JD.com said Shanghai-based Pricewaterhouse Coopers Zhong Tian LLP, which was the auditor of its 2011 and 2012 financial statements included in the filing, was one of the firms subject to the six-month suspension in the Jan. 22 decision. “We may therefore be adversely affected by the outcome of the proceedings, along with other U.S.-listed companies audited by these accounting firms,” the company said in the document.
Alibaba, based in Hangzhou, hasn’t decided when and where to sell shares, an external spokesman for the company said by phone Nov. 20 after a Nikkei newspaper report cited the company’s founder Jack Ma as saying he preferred having an initial public offering in Hong Kong as early as this year.
ADRs of Qihoo, China’s second-biggest search engine, surged 6.9 percent to $97.30, the highest price since its U.S. IPO in March 2011. The ADRs have risen 19 percent this year after surging 176 percent in 2013.
LightInTheBox, a Beijing-based web retailer of lifestyle goods selling to overseas markets, gained 3.4 percent to $9.44, the biggest rally in two weeks.
Melco Crown Entertainment Ltd. (MPEL:US), a Macau casinos operator, climbed 2.8 percent to a one-week high of $40.91. Aaron Fischer, head of consumer and gaming research at CLSA Ltd., said gaming revenues in Macau may double by 2020 in an interview with Bloomberg Television yesterday. The city’s casinos generated $45 billion in gaming revenue in 2013, recording an average 29 percent annual growth since 2002.
The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund in the U.S., gained 0.5 percent to $34.66, the highest level in a week. The Standard & Poor’s 500 Index advanced 1.1 percent as Facebook Inc.’s earnings beat estimates and consumer spending picked up.
The Hang Seng China Enterprises Index (HSCEI) in Hong Kong slipped 0.8 percent to 9,818.36 in the last trading session before the Lunar New Year holiday. The Shanghai Composite Index (SHCOMP) retreated 0.8 percent to 2,033.08, halting a two-day advance. The market will be closed for a week for the holiday until Feb. 7.
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