China’s JD Logistics seals $1.1 billion capital increase, stock drops 11% By Reuters

By Scott Murdoch

(Reuters) -China’s JD (NASDAQ:) Logistics priced new shares issued on Friday in a $1.1 billion capital increase at a steep discount to their previous close, triggering a slump in its stock early in the Kong Kong trading session.

According to a Hong Kong Stock Exchange filing, JD Logistics priced the shares at HK$20.71 each, a discount of about 10% to Thursday’s closing price, to raise HK$8.53 billion ($1.09 billion) on Friday. The stock fell by up to 11% on Friday in early trade to HK$20.35.

The deal consisted of a placement of about $700 million worth of shares to its parent company JD.com, and about $400 million in a primary share sale, according to filings on Thursday.

It was the first follow-on share sale in Hong Kong since Feb. 21, and the biggest since Sunac China carried out a $580 milllion top-up placement in early January.

It was also the third-largest follow-on deal in Asia and fifth globally this year, according to Refinitiv data.

The share sale came despite ongoing volatility in regional equities markets, with Hong Kong’s down 6.5% this year.

The top 15 investors who bid during the bookbuild were allocated 80% of the stock that was on offer, according to a source with direct knowledge of the matter, who declined to be identified because he was not authorised to discuss the deal.

JD.com did not immediately respond to a request for comment on the deal’s composition.

JD Logistics said it would use the money raised to help fund potential acquisitions and build up its cash reserves.

($1 = 7.8232 Hong Kong dollars)