JD.com to purchase $1.5 billion stake in brokerage

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Three sources has it that JD.com Inc is in talks to buy a stake in brokerage Sinolink Securities worth at least $1.5 billion.

The move is in a bid to bolster the e-commerce major aim to strengthen its financial services operations.

A deal to buy the stake from Sinolink’s largest shareholder, Yongjin Group, would be the biggest bet in acquisition value terms by JD.com in China’s $45 trillion financial market.

JD.com, China’s 2nd-biggest e-commerce company by revenue, started discussions with Yongjin late last year, seeking to buy part or all of its 27% stake, two of the people with direct knowledge of the matter.

Based on Sinolink’s market value of 39 billion yuan ($6 billion) on Thursday, a 27% stake would be worth about 10 billion yuan.

The potential deal comes as Chinese tech majors are keen to expand into financial services despite a regulatory crackdown on some parts of the sector.

JD.com gets the bulk of its revenue from its core e-commerce business and owns only a few small financial licences, mainly offering online services including consumer credit and wealth management products.

The sources say it has long eyed a foray into the fast-growing brokerage industry which was worth $1.4 trillion as of end-2020.

China’s top two tech giants, Alibaba Group and Tencent, hold stakes in the country’s leading investment bank, China International Capital Corp.

Alibaba has also invested in large broker Huatai Securities, while Tencent has backed Hong Kong-based online brokerage Futu Holdings.

According to Refinitiv, JD.com has only made two deals in the financial sector so far: its investment in online platform for automotive financing Yixin Capital’s $550 million fundraising in 2016, and another investment worth an undisclosed amount in China Taiping Insurance Holdings’ financial services unit in 2018.

The JD.com-Yongjin talks were at an early stage and subject to change, cautioned the sources, who declined to be identified due to confidentially constraints.

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