JD said it will share data with Qihoo 360 in a similar vein to partnerships with Tencent Holding Ltd, Baidu Inc and news feed app Toutiao. — Reuters
HONG KONG: JD Finance, a unit of China’s No. 2 e-commerce firm JD.com, is in talks to buy a 24% stake worth about US$1.5 billion in domestic brokerage First Capital Securities Co Ltd, people with knowledge of the matter said.
If the deal goes through, it would be a precursor to JD Finance venturing into financial sectors such as securities, banking and insurance that are seeing the entry of several new technology-focused players. Currently, it mainly offers online financial services and products in China.
JD Finance is looking to buy the stake from First Capital’s top and third-largest shareholders, Bloomage Xinyu Investment and Nengxing Holdings Group that own 15.4% and 8.5%, respectively, one of the sources added.
Based on First Capital’s market value of about US$6 billion as of Friday, a 24% stake in the company - which was JPMorgan Chase’s former China securities joint venture partner - would be worth about US$1.5 billion.
The deal, however, is yet to be finalised as no agreement has been reached over valuation, the sources said.
JD.com declined to comment about its or JD Finance’s plans.
First Capital, Bloomage Xinyu and Nengxing did not respond to Reuters request for comment.
JD.com, which owned 68.6% of its finance unit before it was spun-off this year, sold 28.6% of the unit for US$2.2 billion to a couple of undisclosed investors.
An acquisition of a First Capital stake will take JD Finance into a territory that has traditionally been dominated by large and state-owned groups, but which is now seeing an influx of new entrants such as technology giants Alibaba Group finance affiliate Ant Financial and Tencent.
JD Finance, which only owns a few, small financial licences such as a third-party payment licence in China, will likely get access to some lucrative businesses of First Capital and its units, including those of securities, funds and stock futures, after the stake acquisition, one of the sources said.
The company aims to gain relevant financial licences either through fresh applications or equity investments in domestic firms, JD.com CEO Richard Liu told staff earlier this year.
Liu owns 4.3% of JD Finance, but holds a majority of voting rights through proxy agreements.
First Capital, one of China’s few listed private brokers, tied up with JPMorgan to set up JP Morgan First Capital Securities Co in 2010. JPMorgan sold its 33.3% stake in the JV to First Capital in December 2016. - Reuters
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