It plans to raise 20 billion yuan.

Recently, the application draft of the IPO prospectus of JD Digital Technology Holdings Co., Ltd. (hereinafter referred to as "JD Digital") on the Science and Technology Innovation Board has been accepted by the Shanghai Stock Exchange.

On October 16, JD.com submitted a response to the inquiry letter to the Shanghai Stock Exchange.

According to the prospectus, JD Digital was independently operated in 2013. In its early days, it mainly provided inclusive financial services to merchants and consumers based on the JD Group’s e-commerce platform.

In 2018, "JD Finance" was renamed JD Digits.

In June this year, JD Digits Co., Ltd. was completely changed to a joint stock company.

In each of the reporting periods from January to June 2017, 2018, 2019 and 2020, JD Digits’ operating income was 9.07 billion yuan, 13.616 billion yuan, 18.203 billion yuan and 10.327 billion yuan respectively; attributable to shareholders of the parent company

Net profits were -3.82 billion yuan, 130 million yuan, 790 million yuan and -670 million yuan respectively, with large fluctuations.

In this initial offering, JD Digits plans to raise 20.367 billion yuan.

If calculated based on the fundraising valuation, JD Digits’ valuation will be around 200 billion yuan after listing on the Science and Technology Innovation Board.

The wealth of Liu Qiangdong, chairman and CEO of JD.com Group, controlling shareholder and actual controller of JD.com, has also increased.

Time Finance reviewed the prospectus and feedback and found that JD Digits still has problems such as incomplete information disclosure, large changes in directors and senior executives, heavy reliance on JD Group, and doubtful independence.

The letter approved that the incomplete prospectus did not contain information in accordance with the relevant provisions of the "Guidelines for Information Disclosure Content and Format of Companies Publicly Offering Securities No. 41 - Prospectus of Science and Technology Innovation Board Companies" in the "Equity Structure and Organizational Structure of the Issuer" section.

Disclosure.

JD Digits’ disclosure of its shareholding structure is relatively simple, and there is no diagram showing the relationship between shareholders.

In addition, the prospectus did not disclose in detail how many subsidiaries JD Digits controlled and participated in. It only introduced that there were 14 main holding subsidiaries and 1 joint-stock company, which did not comply with relevant regulations.

Time Finance checked Tianyancha and found that JD Digits’ equity structure and ultimate beneficial shareholders are very complex, with as many as 4 or 5 levels.

The company-level structure of its control and participation is also very complex, with some having as many as 5 or even 7 levels.

The regulatory authorities also noticed this problem in the review inquiry letter and required JD Digits to fully disclose the brief information of its holding subsidiaries and shareholding companies.

However, in its response to the inquiry letter, JD Digits still only stated the number of companies, that is, a total of 158 domestic and overseas holding subsidiaries, 174 joint-stock companies, and 332 companies.

Among them, only 15 companies have disclosed "brief information", and the remaining 317 companies have not yet "completely disclosed".

Dr. Ding Huiren, an expert and auditing expert from the China Association of Certified Tax Agents, told Time Finance that according to relevant regulations, JD Digital’s disclosure was too simple and suspected of omissions. It should be disclosed in accordance with relevant requirements, otherwise it would not be consistent with the completeness required for disclosure.

Actual Controller Risk As of the date of the signing of the prospectus, the controlling shareholder and actual controller of JD Digits is Liu Qiangdong, who directly and indirectly controls 50.35% of the issuer’s shares before the issuance, and controls the voting rights of JD Digits in total.

The shares accounted for 74.77% of the total voting rights before the issuance.

Does JD Digits also have actual controller risks?

The prospectus only reminds in the last part of "Risk of infringement of shareholders' interests caused by the special voting rights mechanism": "Under special circumstances, the interests of the company's controlling shareholders and actual controllers may be inconsistent with the interests of other shareholders of the company, especially small and medium-sized shareholders.

There is the possibility of harming the interests of other shareholders, especially small and medium-sized shareholders.” This part is actually the “actual controller risk” and needs to be paid attention to by investors.

In view of JD Digits’ ownership structure and Liu Qiangdong’s relatively strong control position, changes in directors and senior executives during the reporting period also need to attract investors’ attention.

The prospectus shows that Liu Qiangdong served as the manager of JD Digital from September 2012 to September 2018, and as the chairman of JD Digital from September 2012 to February 2020.

Then, it was said that Liu Qiangdong would no longer serve as chairman due to personal reasons on January 8, 2018. There was a time gap between the two statements in the prospectus.

In addition, comparing the list of directors who took office on January 8, 2018 and June 20, 2020, there are also major changes in JD Digits.

In the list of directors on January 8, 2018, Yu Rui is the chairman, including 8 directors including Zhang Zetian and Chen Shengqiang.

As for the director list on June 20, 2020, only Chen Shengqiang remains as the former director, and all other directors have resigned.

Among the board members who have withdrawn are Liu Qiangdong’s wife Zhang Zetian.