Ucommune finds US investment bank to work on IPO: report

January 10, 2020 14:59
The WeWork IPO fiasco has led to doubts about the prospects of other firms in the same industry, including China's Ucommune. Representational image: Bloomberg

Ucommune, a Beijing-based shared workspace provider, has tapped a little-known US investment bank to help launch its initial public offering, Reuters reports, citing people familiar with the matter.

The move came after Citigroup and Credit Suisse walked away from underwriting the deal, the report noted.

Ucommune had been left with a syndicate of Chinese brokerages as IPO underwriters, because Citigroup and Credit Suisse decided they could not deliver the offering at a valuation they had previously discussed with the company, Reuters reported last month.

Ucommune decided it could not proceed with the IPO without a US investment bank, since most Chinese brokerages have little experience handling stock market debuts in New York and are not accredited to do so by US regulators, according to the report.

Hence, it has now hired Benchmark Company, a New York-based brokerage, as an IPO underwriter, Reuters cited its sources as saying.

Ucommune raised US$200 million in a private fundraising round in November 2018, giving it a valuation of US$2.6 billion.

While the targeted IPO valuation and deal size it will pursue could not be learned, they were seen as unrealistic by the banks that balked at underwriting it.

Ucommune could start its IPO investor roadshow as early as this month in Hong Kong, ahead of its debut on the New York Stock Exchange, according to some of the Reuters sources.

The Chinese firm faces a tough sell with IPO investors after its US peer WeWork canceled its stock market flotation last year, amid concerns that some venture capital investors, including SoftBank Group, had inflated its valuation through private funding rounds.

However, Ucommune plans to compare itself in its investor presentations to Huazhu Group, a New York-listed Chinese hotel company which has seen its share price soar more than 200 percent since its IPO in 2010, outpacing the wider US stock market, sources told Reuters.

Ucommune says it has shared workspaces in 200 locations across 44 cities including Beijing, Shanghai, Hong Kong, Los Angeles and New York.

The company posted a net loss of 572.8 million yuan (US$82.6 million) for the nine months to September on revenue of 874.6 million yuan, according to the report.

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