Categories Finance

JD.com’s finance unit raised $2 billion in fresh equity

JD Finance — the financial arm that JD.com (JD) spun off last year — managed to raise $1.96 billion in the latest equity offering.  According to Reuters, this has increased the valuation of the company before the rumored initial public offering.

Last year, Alibaba’s (BABA) rival JD.Com agreed to sell its financial arm, JD Finance, for $2.1 billion in cash, with an aim to reorganize the unit and challenge the billionaire Jack Ma Yun’s Ant Financial.

The fundraising for JD.com’s financial subsidiary, that is yet to be completed, brings the current valuation to 120 billion yuan, a two-fold increase from 60 billion yuan that was estimated at the time of the split.

JD Finance — the financial arm that JD.com (JD) spun off last year — managed to raise $1.96 billion in the latest equity offering.

JD Finance is working towards boosting its service towards the financial institutions and is doing so by investing in artificial intelligence and cloud computing.

JD.com owned 68.6% of its lending unit. Last year, it sold 28.6% of the unit for $2.3 billion to undisclosed investors. Based on the deal, JD.com would get 40.0% of the profit that its lending unit generates. JD Finance was even considering a $1.5 billion stake in brokerage firm First Capital. The brokerage firm, however, had denied these reports. Sources claim that acquiring a stake in First Capital would pave way for JD Finance into credit and investment services.

The two e-commerce competitors, JD.com and Alibaba, separated their financial units. Alibaba separated its finance unit, Ant Financial, before their debut as a public company in 2014. Both JD Finance and Ant Financial, are not in a rush for IPO. The companies are currently looking at expanding into new markets and venturing into new services. In June, Ant Financial raised $14 billion bringing its valuation at $150 billion.

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