(WSJ) JD Health International Inc., an online health-care business controlled by Chinese online retailing giant JD.com Inc., filed an application to go public in Hong Kong, in a deal that people familiar with the situation said could raise at least $3 billion.
The Beijing-based company said it operates China’s largest online retail pharmacy by revenue, and provides health-related services including online consultations with doctors and medical-appointment scheduling. It is also looking to expand into prescription-drug wholesaling in China.
JD Health’s IPO could be launched by December, according to people familiar with the deal. The share sale is being led by Bank of America Corp., Haitong International Securities Group Ltd. and UBS Group AG. Nasdaq-listed JD.com currently controls about 81% of JD Health, which uses its parent’s logistics network for delivering drugs nationwide.
Investor enthusiasm for health-care and biotechnology companies is robust, thanks in part to the coronavirus pandemic, which has also given a boost to telemedicine providers in China. Health-care and biotechnology companies have raised nearly $33 billion in IPOs and secondary share sales globally this year, already far more than the total raised in 2019 and the biggest yearly amount in the past decade, according to Dealogic. Such companies have raised $5.4 billion from new listings in Hong Kong this year, and JD Health would bump up the total.
JD Health’s rival, Ping An Healthcare & Technology Co. , which operates the Good Doctor online health platform in China, listed in Hong Kong in 2018, and its shares have jumped more than 80% in the year to date. Alibaba Health Information Technology Ltd. , a Hong Kong-listed online health provider controlled by internet giant Alibaba Group Holding Ltd. , has also chalked up large gains.
Revamped listing rules in Hong Kong have allowed startups to list before they turn a profit. Nasdaq-listed drugmaker Zai Lab Ltd. on Monday began trading on the Hong Kong stock exchange after the Shanghai-based company recently raised $766 million for a secondary listing. Another biotechnology company, Everest Medicines Ltd., is also seeking to list in the city.
JD Health’s prospectus said the company booked after-tax profits in 2017, 2018 and the first half of 2019. It recorded a net loss of 5.4 billion yuan, equivalent to $791 million, in the six months to June 2020, due to higher expenses and a charge for the change in fair value of convertible preferred shares. Revenue for the six-month period rose 76% to 8.8 billion yuan, the bulk of which came from sales of pharmaceutical and health-care products that include over-the-counter medicines, prescription drugs, contact lenses and medical devices.
Hong Kong has drawn dozens of listings from Chinese companies this year, including IPOs and secondary listings from firms that previously went public in the U.S., as frictions between the governments of the world’s two biggest economies have escalated. JD.com itself earlier sold $4.5 billion of shares for a Hong Kong listing in June.
U.S.-listed ZTO Express (Cayman) Inc., a Chinese courier backed by Alibaba, will start trading in Hong Kong on Sept. 29, after selling nearly $1.3 billion of stock.
Investors remain eager for ways to bet on China’s increasingly affluent consumers. China’s top bottled-water company, Nongfu Spring Co. , and Ming Yuan Cloud Group Holdings Ltd. , a Chinese provider of software for property developers, both surged in their recent debuts in Hong Kong.
Source: Wall Street Journal by Joanne Chiu