Hong Kong IPO of JD's Fintech Arm Reportedly Delayed

After its predecessor's failed bid in Shanghai, JD Tech is now jumping hurdles on the way to a Hong Kong listing.
May. 12, 2022 21:35
Hong Kong IPO of JD's Fintech Arm Reportedly Delayed

(CapitalWatch, May 12, Hong Kong) The $2 billion IPO for JD Technology, the fintech division of JD.com (Nasdaq: JD, HKEX: 9618), is reportedly delayed as regulators stall on approval.

Anonymous sources told Reuters that JD was hoping to submit its initial filings with the Stock Exchange of Hong Kong by the end of March. 

The company applied to the China Securities Regulatory Commission in late January for the listing. Sources said the company planned to go public later this year, but it still has not gained the mandatory approval. The delay is pushing back JD Tech's reported timeline, throwing it into uncertainty. 

Since the approval has been delayed past JD's expected timing, one source said the company will need to rework financial accounts to include new figures.

China's e-commerce giant JD has managed to circumvent the worst of what its peers experienced during China's regulatory crackdown. But the company is still struggling in the uncertain waters. 

In 2020, JD.com sought an initial public offering for JD Tech's predecessor, JD Digits. The company eventually withdrew the $2.9 billion IPO application to Shanghai's STAR Market in 2021 six months after filing.

As China intensified its control of the fintech sector, JD sold JD Digits for a combined valuation of $2.3 million shortly after the IPO was scrapped. 

The dealy highlights the concerns surrounding investing in Chinese companies. As Beijing continues to hammer on business structures and data security, mainland companies are being put under pressure. Tech companies like JD.com have been the main targets. 

Hong Kong has seen a dramatic decrease in IPOs so far this year, raising just $1.9 billion compared to just over $20 billion in the same period of 2021.

Although Hong Kong has had a disappointing year amid a turbulent economy and ongoing regulatory battles, companies are still eyeing the bourse. A slew of U.S.-listed Chinese companies are pursuing a dual listing status in the city.  Alibaba (NYSE: BABA; HKEX: 9988) and Baidu (Nasdaq: BIDU, HKEX: 9888) headed the trend alongside JD Tech's parent JD.com.

Meanwhile, in the U.S., the Securities and Exchange Commission has been enforcing audit checks according with the Holding Foreign Companies Accountable Act, and non-compliant Chinese companies are facing delisting threats. While the two countries work out a compromise, the companies are left in the lurch. As a result, many firms have been looking for listings closer to home to protect their shares.