(Yicai Global) June 5 -- Nasdaq-traded JD.Com filed a preliminary prospectus for a secondary share sale in Hong Kong, moving China’s second-biggest online retailer another step closer to debuting on last year’s star market for listings along with compatriot NetEase.

JD will use the proceeds of the sale for technology innovation to improve smart pricing, inventory management, logistics, and talent acquisition, the firm said in the prospectus it published today after clearing an exchange hearing.

The Beijing-based company did not disclose a fundraising target or the amount of shares it plans to sell. JD could raise more than USD2 billion, Bloomberg News reported on May 22. That would top the USD1.2 billion the company raised when it listed on the Nasdaq in 2014.

As the US is looking to tighten regulations to subject US-listed Chinese businesses to similar accounting standards, many have started eyeing Hong Kong debuts. Guangzhou-based internet firm NetEase is expected to start trading in the special administrative region on June 11.

E-commerce rivalry could also be a motivation. JD's US listing has been disappointing because its market value is several times smaller than that of Alibaba, with even Nasdaq-listed newcomer Pinduoduo surpassing JD, Fang Jie, general manager of Phoenix Tree Capital, told Yicai Global.

JD could list in Hong Kong on June 18, according to a Chinese media report on May 19. The company declined to comment.

Nasdaq Shares

JD.Com’s stock price [NASDAQ: JD] gained almost 2 percent in pre-market trading today, after rising 0.4 percent to USD56.52 yesterday for a market cap of USD70.3 billion. The shares have risen by over 60 percent so far this year.

Hong Kong is also closer to the 22-year-old firm's clients. JD should be able to boost its market value with the new offering because Hong Kong is close to many investors who have deep knowledge of its business, Fang said, adding that China's investment market is increasingly mature with boosted liquidity.

The Hong Kong Stock Exchange was the world’s biggest market for public offerings for a second year in a row last year, beating out the Nasdaq, thanks largely to two big-ticket floatations in the second half: Budweiser Brewing Co. APAC’s USD5.7 billion listing in September and Alibaba Group Holdings’ USD13 billion listing in November.

Nasdaq-listed Chinese gaming company NetEase is seeking to raise as much as USD2.8 billion in its upcoming secondary listing in Hong Kong, according to the  Hangzhou-based company’s prospectus. The new shares are expected to start trading on June 11.

Supply Chain Investment

JD will continue to invest in supply chain platforms to provide integrated solutions to merchants inside and outside of its ecosystem, according to the prospectus. But if the logistics infrastructure expansion fails, its performance could be harmed, it added.

Founder Richard Liu is influential in the company's decision-making, according to the risk section of the filing. The chairman has a 15.1 percent stake in the company with more than 78 percent of the voting rights. A unit of Tencent Holdings has a 17.8 percent stake with less than 5 percent of the voting rights. Walmart has bought nearly 10 percent of JD’s US equity.

In the first quarter, JD posted CNY146.2 billion (USD20.6 billion) in revenue, up 21 percent from a year earlier. GAAP net profit fell 85 percent to CNY1.1 billion (USD155.3 million).

Editor: Emmi Laine