Canadian fund triples gains two years after investing in JD.com

Wednesday, 20 August 2014
Ontario Teachers’ Pension Plan, a retirement fund, bought circa 44 million of the then-privately held company’s shares in November 2012 for 175 million dollars. Two years and a flotation later, the investment’s value has more than tripled to 630 million dollars.

By the end of June, after JD.com went public in the US, seeing its stock rocket, the investment’s value more than tripled to 630 million dollars, as shown in a filing made August 14 with the US market regulator (SEC).

The Toronto-based fund owns a 2.03 percent stake in the online retailer.

Oversees investors to cash on rocketing Chinese ecommerce

“It’s a clear positive that JD has the support of sophisticated investors with deep emerging markets experience,” Eric Brock, a Boston- based portfolio manager at Clough Capital Partners, said. “JD is investing in a big market. Having the support of large, long-term investors will be very helpful as they create value.”

JD.com’s gross merchandise volume, that is the value of all goods sold on its website, jumped 107 percent in the second quarter from a year earlier as revenue surged 64 percent to 4.6 billion dollars, according to a company´s report released on August 15.

Sources consulted by Bloomberg highlight that investments such as this from The Ontario Teachers’ Pension Plan is part of a growing trend that’s seen oversees asset managers scoop up stakes in Chinese e-commerce operators to benefit from surging online shopping in the world’s largest pool of Internet users.

In an interview with Bloomberg, David Riedel, president and founder of Riedel Research Group in New York, explained that “People are clearly looking for ways to play this tremendous growth and this is creating demand for Chinese e-commerce plays.”

“Details coming out of the reports and filings leading up to the Alibaba IPO have highlighted to investors the strong trends in e-commerce in China,” he added.

Related News