Citi, Credit Suisse drop China’s Ucommune US IPO over valuation

Photo: Ucommune

Citigroup Inc and Credit Suisse Group AG have dropped out of the U.S. initial public offering of Chinese shared workspace provider Ucommune, baulking at its desired valuation, two people with direct knowledge of the matter said.

Ucommune‘s latest filing with the U.S Securities and Exchange Commission lists Chinese banks Haitong International and China Renaissance as leading the planned IPO.

Earlier filings had named Citigroup and Credit Suisse, but both walked away over the past few days because they could not agree to an achievable valuation with Ucommune, the people said, declining to be identified because the information was private.

Ucommune did not immediately respond to a request for comment, while Citigroup and Credit Suisse declined to comment.

“There was a big gap between what the company had hoped to achieve and where the market is sitting now,” one of the people said, adding that pressure for a higher valuation also came from some investors who took stakes in recent private funding rounds.

The valuation that Ucommune is pursuing and the valuation that Credit Suisse and Citi believed possible could not be learned.

The banks also had concerns about Ucommune‘s rapid timeline to complete its IPO, another of the sources said. The company is eyeing a listing as soon as early January, the source added.

Data provider Dealogic told Reuters on Thursday it was not aware of any company ever going public on a U.S. exchange without a Western bank, as would be the case with Ucommune.

It is possible that a Western bank will still join Ucommune‘s IPO syndicate before its stock market debut, one of the sources said.

In recent months, Credit Suisse has also exited the U.S. IPOs of Chinese drone maker Ehang and Chinese cryptocurrency mining equipment maker Canaan before their listings, according to regulatory filings.

Credit Suisse did not immediately respond to a request for comment on these IPOs.

Ucommune raised $200 million in November last year, giving the Beijing-based group a valuation of $2.6 billion.

At least one adviser warned Ucommune in recent weeks that it would likely get a lower valuation from its IPO – a so-called down round when the latest funding gives a company a lower valuation than the preceding one – one of the sources said.

Ucommune refused to accept the advice, the source added.

While Ucommune‘s preliminary filing did not provide any details of the size of the offering, sources previously told Reuters it was aiming to raise about $200 million.

Reuters revealed Ucommune‘s IPO plans in October in the week that larger U.S.-based rival WeWork was forced to accept a $10 billion bailout after investors, eying its mounting losses, baulked at the valuation it sought from its IPO.

Ucommune, which says it has shared workspaces in 200 locations across 44 cities including Beijing, Shanghai, Hong Kong, Los Angeles and New York, posted a net loss of 572.8 million yuan ($81 million) for the nine months to the end of September on revenue of 874.6 million yuan.

Its IPO push comes just as Ping An Insurance’s OneConnect Financial Technology cut its planned U.S. IPO and lowered its target valuation to up to $3.64 billion, well below the $7.5 billion in its maiden funding round last year.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.