Credit Suisse Group AG and Citigroup Inc have withdrawn from the US IPO (initial public offering) of Ucommune, a shared workspace provider of China, over valuation disagreements. The update was apparently shared by two individuals who’ve direct knowledge about the matter.
Providing more details, the reports said that the two companies backed out from the filing over the last few days as they couldn’t arrive at a mutual agreement over an attainable valuation with Ucommune. One of the two people in the know of the matter revealed on a condition of anonymity that there existed a huge gap between the firm’s current market standing and what it had hoped to attain.
In addition to that, the source also hinted towards a potential pressure being created for a higher valuation by some of the investors who had taken stakes in the recent private round of funding.
However, the valuation Citigroup and Credit Suisse believed was possible, and the valuation Ucommune intended pursuing has not been learned.
The latest filing by Ucommune with the United States Securities and Exchange Commission (SEC) now lists China Renaissance and Chinese banks Haitong International as leading the planned offering.
Another source disclosed that Ucommune is aiming for an early-January listing. Interestingly, banks are concerned about the company’s express timeline for the completion of its IPO, added the source. Credit Suisse and Citigroup refused to comment on the matter.
For those who came in late, Ucommune had succeeded in raising 200 million dollars in November 2018, attaining a 2.6 billion dollar valuation. The source also shared that Ucommune was warned by one of the advisors that the IPO would possibly provide the firm with a lower valuation, adding that the company declined to follow the advice.
The initial filing by Ucommune didn’t include details over the offering’s size. However, it is said that the company was eyeing to raise around 200 million dollars.
As per Ucommune, its shared workplaces have a presence in as many as 200 locations in 44 cities that include Shanghai, Beijing, Los Angeles, New York, and Hong Kong. The company reported a net loss of around 81 million USD (572.8 million Yuan) till September end on the profit of 874.6 million Yuan.
It is important to note that apart from this IPO, Credit Suisse has withdrawn from the US IPOs of other Chinese firms as well in the past months prior to their listing, as per the regulatory filing. These firms are Ehang, a China-based drone maker and Canaan, a Chinese crypto mining equipment maker.