Dada Nexus Makes Nasdaq Debut Despite US Plans to Curb Stateside IPO’s by Chinese Firms

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Online Chinese grocery delivery platform Dada Nexus has listed on the Nasdaq exchange amidst calls for greater scrutiny of and curbs upon the stateside IPO’s of companies from China.

Dada listed under the ticker DADA on Friday 5 June, with a valuation of USD$3.5 billion.

The company was first founded in 2014, and its JD-Dao­jia (达达-京东到家) and Dada Now (达达快送) brands have since emerged as two of the lead­ing on-de­mand re­tail plat­forms in the Chi­nese mar­ket. 

JD.com and Wal­mart made an in­vest­ment of $250 mil­lion in Dada Nexus in 2016, while the com­pany is also co­op­er­at­ing with other com­pa­nies in ar­eas in­clud­ing mar­ket­ing, user traf­fic, sup­ply chain, and an “omni-chan­nel ini­tia­tive.”

JD.com is cur­rently the biggest share­holder in Dada Nexus with a 51.4% stake, while Wal­mart holds 10.8% of eq­uity. JD.com also holds a 47.4% stake in joint-ven­ture JD Dao­jia, and is the com­pa­ny’s sin­gle largest share­holder. 

The listing comes just after the mooting of various measures by the US to impede the listing of Chinese companies on its bourses, amidst worsening Sino-US relations in the wake of the COVID-19 pandemic.

Nasdaq plans to introduce a minimum threshold requirement of USD$25 million for IPO’s by foreign companies, in a move which observers say will put a roadblock in front of the listing ambitions of smaller Chinese firms.

The Trump administration has also proposed that all Chinese companies seeking to list in the US submit financial reports that comply with local accounting standards in the form of Gen­er­ally Ac­cepted Ac­count­ing Prin­ci­ples (GAAP).

Dada CEO Philip Kuai said that the proposed restrictions would not have an adverse impact on the company, which he also sees as benefiting from the COVID-19 lockdown.

“We particularly welcome better auditing and regulation,” said Kuai on the day of Dada’s IPO.

“Only when your entire environment is as healthy as possible will the interests of everyone  — including investors and customers— be protected, and the market develop in a healthy way.”

While China’s GDP posted a 6.8% contraction in the first quarter of 2020 as a result of the Novel Coronavirus lockdown, Dada’s active customers for on-demand retail delivery posted a 7.1 million YoY rise to 11.9 million.

Average order size also increased by over 50% to 149.5 yuan (USD$21).

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