UCommune, China’s biggest coworking company, is finding the road to listing on the New York Stock Exchange rocky in the wake of We Company’s failed IPO attempt.
The initial public offering of UCommune might come as early as next month, The Wall Street Journal reported, citing people familiar with the matter. The Beijing-based company had 171 co-working spaces and 72,700 workstations, mostly in China, at the beginning of October.
UCommune may test whether investors are still interested in flexible-office companies in the wake of We Company’s failure. We Company, parent of WeWork, in September dropped plans to sell shares publicly after concerns were raised about how the firm was being run and what it was really worth.
The Chinese company was valued at $2.6 billion in a funding round last year, the Journal said. That is a far cry from the $47 billion value given to We Company in a fundraising this year with Softbank Group Inc. In the days before We’s IPO was pulled, executives and underwriters were expecting the value to plummet to as little as $15 billion because of the concerns about the company’s potential profitability, the Journal reported.
Disagreements over UCommune’s valuation led Citigroup and Credit Suisse Group to drop out of participating in the IPO, Reuters reported last week, citing people familiar with the matter. The banks also were concerned that plans for a January IPO were rushed, Reuters said.
The Securities and Exchange Commission’s filing lists Chinese banks Haitong International and China Renaissance as lead underwriters for the IPO.
- UCommune has sustained net losses since its founding in 2015. For the nine months ended in September the company posted a loss of about $80 million.
- The flexible workplace market has grown 13% a year for the past decade, according to CBRE research. Coworking companies compete on affordability, spaciousness, and by going after specific market segments, such as women or entrepreneurs or underserved locations.
- Not all coworking companies are being shunned by Wall Street. Knotel, which focuses on providing workspaces for large enterprises, raised $400 million in August, giving it a valuation of more than $1 billion.
