Hong Kong’s second-biggest IPO of the year seals founder’s fortune
ANOTHER billionaire has been minted thanks to the online shopping boom that is expanding from China to South-east Asia.
J&T Global Express started trading on Friday (Oct 27) in Hong Kong after completing the city’s second-biggest initial public offering (IPO) of 2023, leaving its founder Li “Jet” Jie with a US$1.5 billion net worth, according to the Bloomberg Billionaires Index. Shares traded at the listing price of HK$12 as at 12.39 pm SGT.
The courier company, which provides delivery services for online stores such as Shein and Pinduoduo, raised US$500 million in the IPO.
The muted performance at the debut comes at a tough time for IPOs in Hong Kong, traditionally one of the world’s busiest venues for new share sales globally.
It was the biggest offering in the city since ZJLD Group’s US$676 million listing in April, and happened the same week the financial hub announced efforts to revamp activity in equities trading.
Proceeds from new share sales in the city’s exchange slumped 63 per cent to about US$4.1 billion year-to-date, hit by headwinds ranging from high interest rates to economic and geopolitical woes tied to China. The flat performance compares to an average drop of 4.8 per cent in the first trading day for ten companies that listed in the city after raising more than US$500 million over the past two years, according to data compiled by Bloomberg.
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Li, who has an 11 per cent stake in J&T, is the latest Chinese billionaire to be created from the online shopping surge of the past two decades, and the first with a fortune that originated in South-east Asia, according to the Bloomberg index.
The online retail frenzy has produced several shopping moguls from China, including Jack Ma of Alibaba Group, China’s largest e-commerce company, who is worth US$28.5 billion. There’s also SF Holding’s Wang Wei, ZTO Express Cayman’s Lai Meisong and Yunda Holding’s Nie Tengyun, who are all billionaires.
Li, 48, started J&T after spending more than 15 years at Chinese smartphone maker Oppo, helping to expand its operations in South-east Asia. After founding J&T in Jakarta in 2015, the company grew throughout the rest of the region and then into China in 2020. As at 2022, J&T represented more than 20 per cent of the express delivery industry’s market share in South-east Asia and handled more than three times the package volume of the next biggest player, according to the prospectus.
J&T’s quick expansion attracted a group of big name investors, including Tencent, SF Express, Sequoia Capital and Li’s former employer, Oppo.
J&T’s presence in China has also been growing. More than half of the company’s US$7.3 billion revenue in 2022 came from business in the country, overtaking South-east Asia as its biggest region, according to the prospectus.
“J&T’s mainland China expansion is eye-catching,” said Wang Ting, analyst at Essence Securities in a report, “but the low-cost strategy is hard to sustain in mid-to-long term”.
The company recorded US$1.5 billion in adjusted losses last year and is only profitable in South-east Asia, according to the prospectus. J&T launched operations in the United Arab Emirates, Saudi Arabia, Mexico, Brazil and Egypt in 2022, bringing the number of countries it works in to 13. Last year, it also named football star Lionel Messi as a brand ambassador.
“Though profitability of the company’s China business has improved, South-east Asia margins continue to decline, hence our analysis suggests that J&T may not be able to generate profits in the near-term,” said Shifara Samsudeen, an analyst at LightStream Research. She added that the IPO stock price was “overvalued”.
A British Virgin Islands vehicle tied to Chen “Tony” Mingyong, founder of smartphone maker Oppo, owns 4.2 per cent of J&T, according to the filings. Liang Xiaojing, Chen’s wife, separately controls a 3.7 per cent stake in J&T, the filing shows. BLOOMBERG
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