Shares of JD Health, the healthcare unit of Chinese e-commerce group JD.com, jumped 34% on their stock market debut after raising $ 3.5 billion in largest public offering Hong Kong initial in 2020.
The company, which sells pharmaceuticals and health services online, slashed those gains to trade 24% higher in Tuesday morning trading.
Investor demand for shares of JD Health far exceeded supply. The company sold 339.9 million shares at HK $ 70.58 ($ 9.11) each, or just over 12 percent of its share capital, according to a list of conditions. That gives the company a valuation of almost $ 29 billion.
If the bankers exercise a so-called over-allotment option, which would increase the size of the offering by 15%, the IPO could exceed $ 3.9 billion.
JD Health is Hong Kong’s first major tech listing since Chinese regulators intervened at the last minute to suspend Ant Group payments business Proposed $ 37 billion IPO, which would have been the largest in the world.
Andy Maynard, managing director of China Renaissance Securities in Hong Kong, said the deal was a “landmark transaction” and JD Health shares could rally further. “We still have a lot of institutional buyers because it was very oversubscribed.”
$ 4.4 billion
Amount JD.com raised in its secondary listing in Hong Kong earlier this year
The company and other Chinese online healthcare platforms, including Alibaba’s Ping An Good Doctor and AliHealth, have reported increased revenue and user activity this year. Patient fears about visiting hospitals during the coronavirus epidemic in China spurred online consultations in early 2020.
Online consultations and pharmacies also offer a potential way to fill long-standing gaps in health care coverage in China, where the best doctors and equipment are concentrated in leading hospitals in major cities across the country.
Commercial health insurance, despite a growth, remains rare in China.
JD Health’s internet pharmacy business had 72.5 million annual users last year, and its healthcare platform, which allows patients to connect with healthcare professionals over the internet, counts more than 65,000 doctors.
For the six months ending June, JD Health reported a loss of 5.4 billion Rmb ($ 820 million) on 8.8 billion Rmb in revenue, the latter increasing 76% year-on-year .
JD Health’s bid comes as the Hong Kong stock exchange has been boosted this year by a bumper harvest of so-called return home lists by Chinese groups. The Trump administration has pushed forward legislation that could result in Chinese companies being pulled from U.S. stock exchanges.
JD.com listed on Nasdaq raised $ 4.4 billion in a secondary offering from Hong Kong earlier this year.
JD Health is one of the many subsidiaries of JD.com in the process of exploiting the financial markets. JD Digits, a financial technology company, filed for an IPO in Shanghai in September.
Primary investors in the JD Health offering include private equity firm Hillhouse, Singapore sovereign wealth fund GIC and asset manager BlackRock.
Underwriters for the transaction include BofA Securities, UBS and Haitong Securities.
Additional reporting by Wang Xueqiao in Shanghai