Dec 12, 2019 07:32 PM

China’s Shared-Office Specialist Labors to Succeed Where WeWork Failed

Ucommune lost $79 million in the first nine months of this year. Photo: VCG
Ucommune lost $79 million in the first nine months of this year. Photo: VCG

Shared workspace specialist Ucommune has filed to raise about $100 million in a New York IPO, launching the plan into a weak market that has seen similar listings slashed due to poor investor sentiment.

Reflecting that sentiment, Chinese financial services software maker OneConnect Financial Technology Co. Ltd. submitted an updated prospectus cutting the fundraising target for its own New York Stock Exchange listing by half on Wednesday, the same day Ucommune filed its initial public offering prospectus. Many of the roughly dozen Chinese companies that have filed for U.S. IPOs since the end of September are losing money, which observers said may be partly to blame for the weak reception.

Ucommune, sometimes likened to U.S. peer WeWork, calls itself China’s largest operator of shared workspaces, with a portfolio of 197 such sites in 42 cities nationwide.

The company lost 554 million yuan ($79 million) in the first nine months of this year, more than double its loss from a year earlier, according to its prospectus. Its revenue for that period roughly tripled to 875 million yuan. At the same time, the company said it had just 167 million yuan in cash at the end of September and a similar amount in account receivables — money owed by its customers.


Ucommune’s IPO is being solely underwritten by Chinese investment banks including Haitong International and China Renaissance, in an unusual departure from many other such listings that often rely on global giants like Morgan Stanley and Credit Suisse with strong connections to big Western investors. That could mean shares from the offering are mostly being marketed to investors in China, where the Chinese underwriters have better connections, one observer said.

Ucommune’s filing comes just months after WeWork’s own plans for a U.S. IPO were scrapped in late September when investors balked at the company’s huge losses. As a result, WeWork had to turn to existing investor SoftBank for a major life-saving cash infusion that significantly lowered its valuation, reflecting market skepticism towards the company and the broader shared office sector.

“I think the timing of the Ucommune deal near year-end will make it difficult,” said an analyst at a mid-sized brokerage that follows the sector, speaking on condition of anonymity due to company policy. “I'm surprised that they’re coming to the market so soon after the WeWork disaster. I think developing an appetite for the deal may be challenging given the political environment and loss-making status of the business. It’ll be an uphill climb, I think.”

Other observers have said that many Chinese companies may be rushing to make IPOs now — despite the weak sentiment — to open a channel to offshore capital markets as China makes it more difficult for domestic companies to move their money offshore.

Of the roughly dozen Chinese companies to apply for New York IPOs since late September, nearly all that have completed the process ended up sharply reducing their fundraising targets. OneConnect, a financial services software provider backed by Chinese insurance giant Ping An, said in its Wednesday filing that it had lowered its fundraising target to $260 million from a previous $500 million. It further stated that Ping An could become a major supporter of the listing, prepared to buy up to $100 million worth of the IPO shares.

In a similar move, air taxi maker EHang Holdings Ltd. last week slashed the fundraising target for its New York IPO to $46 million from an original target of $100 million.

Contact reporter Yang Ge (; twitter: @youngchinabiz)

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