JD.com Nearing Deal for Controlling Stake in China Logistics

30 Aug 2021, 04:42 AM IST

(Bloomberg) -- JD.com Inc. is in advanced talks to acquire a controlling stake in China Logistics Property Holdings Co., according to people familiar with the matter.

The Chinese e-commerce giant is close to an agreement to acquire the stake in the Hong Kong-listed firm from the major shareholders, China Logistics chairman Li Shifa and RRJ Capital, the people said.

China Logistics said in a statement to the stock exchange after trading was suspended Thursday that Li is in discussions about a possible sale of 26% of the company, though no formal agreements have been entered into.

The stock declined 8% as of 10:20 a.m. Friday, after having fallen as much as 12% following the resumption of trading. The firm has a market value of about HK$13 billion ($1.7 billion).

Bank of America Corp. is advising JD.com on the talks, while UBS Group AG is advising the sellers, one of the people said.

No final decision has been made and the deal could still fall apart, the person said. Representatives for China Logistics and JD.com did not immediately respond to written requests for comment, while RRJ Capital was not immediately available for comment. Representatives for Bank of America and UBS declined to comment.

RRJ Capital, run by former Goldman Sachs Group Inc. partner Richard Ong, is seeking to cash out from the logistics firm after more than six years. The private equity firm and China Logistics’ Li have put more than 50% of the Shanghai-based company up for sale, seeking a valuation of about $2 billion, people familiar with the matter have said.

Talks with a consortium consisting of ESR Cayman Ltd. and JD Logistics Inc., the e-commerce giant’s delivery arm, had stalled over valuation concerns, Bloomberg News reported in May.

Chinese companies have been investing heavily in warehouses and logistics infrastructure, as the coronavirus pandemic accelerated the shift to e-commerce. A boom in online groceries, fueled by the rise of so-called community group buying, has also spurred the need for cold chain logistics to deliver fresh fruits, vegetables and meats to farflung parts of the country.

JD Logistics has been growing at a steady clip, increasing revenues by 54% in the first half, as it stepped up spending on the business. The unit, which went public earlier this year, currently operates more than 1,200 warehouses, executives said last week on a post-earnings call.