Exclusive | JD.com may withdraw fintech unit’s stock sale in Shanghai’s Star Market after restructuring at JD Technology, sources say
- JD.com’s fintech unit, known as JD Finance until 2018, was renamed JD Digits, and then renamed JD Technology in January
- The unit absorbed JD.com’s artificial intelligence and cloud computing businesses in its latest restructuring
The company feels it’s appropriate to withdraw the IPO plan because its name, its business and its senior management team have all changed since the initial listing plan was first filed, said one source who is involved in the listing discussions.
The IPO application by JD Technology is sitting in abeyance. The Shanghai Stock Exchange (SSE) and the China Securities Regulatory Commission (CSRC) have neither given their approval, nor rejected the application. Spokespeople at the bourse operator and the securities regulator could not be reached to comment.
JD.com’s fintech unit, spun off in 2013, earned 43 per cent of last year’s first-half revenue from online consumer loans and cash loan services Baitiao and Jintiao, a growth of 5 percentage points from 38 per cent for the whole of 2019. according to JD Digits’ listing prospectus.
The last time the company made any disclosure concerning its IPO was on October 12, when it provided answers to the SSE’s queries in a 261-page document.
The combination of the rules could either affect the profitability of JD.com’s fintech business, or require the company to scale down, or else pony up more capital to support its ambitions.
“Unless financial service is no longer the main business of JD Technology, it has to restructure to comply with the regulation for microlending, just like Ant Group,” said Zhao Zhidong, a partner at DeHeng Law Shanghai Offices.
JD Technology put its business transformation into overdrive, promoting JD.com’s chief compliance officer Li Yayun to the fintech unit’s chief executive, replacing Chen Shengqiang. Li, JD.com’s Communist Party secretary, had never been in charge of a business unit before at the group.
JD.com could also make use of its various ventures spread across the Chinese regulatory spectrum. The central bank picked JD.com to be the first e-commerce platform for its trial of China’s sovereign digital currency.
The efforts by JD.com to restructure its unit also underscored what’s at stake, said Zhao of DeHeng Law.
“If the company is merely fine-tuning its business by moving cloud technology forward to the front, it might still be possible for JD Technology to have its IPO approved, with the help of professionals like lawyers, brokers and investment institutions,” he said. “If the company wants to list as a fintech company, then it will need to restructure to comply with the regulations.”