JD.com-backed Chinese Delivery Platform Dada Nexus Files For US IPO

Dada Nexus Limited, an on-demand retail and delivery platform backed by Chinese e-commerce giant JD.Com, on Tuesday filed for an initial public offering (IPO) on the Nasdaq Stock Exchange.

Its filing comes after Kingsoft Cloud raised $510 million last week in the largest US listing by a Chinese company this year.

Shanghai-based Dada, which plans to float shares under the symbol DADA, listed the size of the offering at $100 million, a placeholder amount likely to change, according to its prospectus. According to a Bloomberg report, the proposed listing could raise as much as $500 million.

Goldman Sachs, BofA Securities, and New York-based Jefferies are joint underwriters of the deal.

Dada started operations in 2014 as an on-demand delivery platform named “Dada Now” that catered to both merchants and individual users. In 2016, the company added on-demand retail to its portfolio through the acquisition of JD-Daojia (JDDJ) from JD.Com.

China’s local retail market had an online-to-offline penetration rate of merely 0.6 per cent in 2019, according to iResearch data cited in Dada’s prospectus.

Dada Now, which was the largest open on-demand delivery platform in China by the number of orders in 2019, has recorded over 634,000 active riders and 822 million delivered orders as of March 31, 2020. Its intra-city delivery service covers more than 700 cities and counties in China.

Through its partnerships with supermarket chains such as Walmart, Yonghui and CR Vanguard, JDDJ saw its gross merchandise volume (GMV) grow by 92.0 per cent to 15.72 billion yuan ($2.22 billion) in the twelve months ended March 31, 2020.

Walmart became one of Dada’s strategic investors through a $50 million investment in June 2016. In October 2018, Walmart further invested $320 million in its preferred shares, shows the prospectus.

JD Group is the largest shareholder with a 47.4 per cent stake in Dada. Sequoia Capital China, Walmart, and DST Global have equity interests of 10.5 per cent, 9.9 per cent, and 8.7 per cent, respectively.

Proceeds of the IPO will be used for technology and research and development, implementation of marketing initiatives, expansion of user base, and other general corporate purposes.

The company’s net revenues increased by 61.3 per cent from 1.9 billion yuan ($268 million) to 3.1 billion yuan ($437 million) in 2019. The number stood at 1.10 billion yuan ($155 million) for the three months ended March 31, 2020, up 108.9 per cent compared to the same period in 2019.