JD.com to invest $800 million in online grocer Dada Nexus

March 23, 2021 CV TECH INC

Chinese e-commerce giant JD.com said it will invest $800 million in Dada Nexus, the company behind on-demand grocery delivery platform JD Daojia and on-demand delivery platform Dada Now.

Why it matters: The investment underscores JD’s commitment to growing its presence in the logistics sector, which has seen rising demand due to shelter-in-place measures during the pandemic.

  • Dada Nexus’ core strength in on-demand delivery—completing most deliveries to users within a three-mile radius in under an hour—is highly complementary to JD’s existing logistics operations, which focus on overnight shipment.

  • Shares of Dada Nexus surged more than 11% Monday on the news.

READ MORE: Covid-19, an opportunity for e-commerce

Details: JD.com has entered into a share purchase agreement with Dada Nexus to buy $800 million of newly issued ordinary shares, according to a statement (in Chinese) from the company.

  • The new shares were priced at $29 apiece, the Dada Nexus share price as of market close on March 19, the last trading day prior to the agreement.

  • After the transaction, JD.com will hold approximately 51% of Dada’s shares, taking into account its existing holdings.

  • “The company’s increased investment will facilitate both sides to promote the expansion of on-demand retail and delivery, as well as omni-channel collaboration,” Xu Lei, chief executive officer of JD Retail, said in the statement.

  • The deal will help the company further diversify its retail services, improve business partners’ operating efficiency, and deliver better services for its customers, JD said.

  • Dada Nexus’s total net revenues surged 85.2% year on year to RMB 5.7 billion in 2020, according to the company’s fourth-quarter earnings filed on March 8.

Context: Dada Nexus is an entity created by a merger of on-demand delivery platform Dada Now and JD Daojia, JD Group’s former on-demand local retail arm.

  • The company raised $500 million from Walmart Inc. and JD in 2018.

  • The Shanghai-based company went public on Nasdaq in June, raising $320 million.

  • JD Logistics, the logistics arm of e-commerce giant JD.com, filed on Feb. 16 its prospectus for an initial share offering on the Hong Kong stock exchange.