HONG KONG - JD Health International Inc, a major Chinese online healthcare platform, is seeking to raise up to $3.5 billion in what is set to be Hong Kong's biggest initial public offering of the year, a term sheet showed.

The deal which could value the unit of e-commerce giant JD.com at nearly $29 billion when a greenshoe option is included comes during a good year for China's healthcare platforms which have seen their popularity surge in the wake of the coronavirus.

By comparison, its biggest competitor, Alibaba Health Information Technology, has a market capitalisation of around $34.6 billion.

JD Health plans to sell 381.9 million shares in a range of HK$62.80 and HK$70.58, according to the term sheet. A greenshoe option to sell a further 15% of stock would take the size of the IPO up to $4 billion.

According to its draft prospectus, JD Health is the largest online healthcare platform in China by revenue, logging 10.8 billion yuan ($1.6 billion) last year. It had 72.5 million annual active users as of June 30 compared to 53.5 million at the same time last year.

It is also China's largest online retail pharmacy with a 29.8% market share, according to a Frost & Sullivan report.

The fundraising is set to lay the groundwork for greater competition in China's healthcare market, said Zhen Zhou Toh, an Aequitas Research analyst.

"Raising money now is implying that they will be fighting to gain as much market share as possible in the near future, either by building out their network of offline and online pharmacies or increase its online presence by offering discounts," he wrote on the Smartkarma platform this month.

Six cornerstone investors led by GIC, Tiger Global and BlackRock have taken up to $1.35 billion worth of stock in the deal, the term sheet showed.

The book build begins on Wednesday and the shares are due to be priced on Tuesday.

The initial size of the deal represents 12.2% of JD Health's enlarged share capital and the greenshoe, if exercised, will take that to 13.8%.

JD Health shares are expected to start trading on Dec. 8. The company did not immediately respond to a request for comment.

($1 = 6.5769 Chinese yuan)

(Reporting by Scott Murdoch in Hong Kong; Editing by Edwina Gibbs) ((Scott.Murdoch@thomsonreuters.com;))