Chinese e-commerce giant JD.com said on Wednesday that it will spin off its cloud and AI business valued at RMB 15.7 billion (USD 2.4 billion) to JD Digits, according to a filing with the SEC. While JD won’t get any cash from the deal, it will increase its equity interest in JD Digits to about 42%.
“The company will continue to focus on its core competencies,” reads the filing. “JD Digits will be better positioned to deliver a suite of cutting-edge technology services to its business partners.”
JD Digits, which was first known as JD Finance, put its IPO plans on hold after China tightened regulations in the online loan sector. The company filed its listing application for the Star Market of the Shanghai Stock Exchange in September, but there hasn’t been any progress since Ant Group suspended its USD 35 billion IPO in November.
In January, JD Digits was rebranded into JD Technology to pivot away from fintech. The entity now serves as a platform for JD.com to sell its technology to corporations, as well as government bodies, according to the introduction on its official WeChat account.
“The addition of cloud and AI business can help JD Digits increase revenue, a hedge to its financial business, which has been under threat in the current regulatory environment,” DTZ Research lead analyst Ke Yan told KrASIA.
