Citigroup Inc. and Credit Suisse Group AG dropped out of Ucommune Group Holdings Ltd.'s proposed IPO due to disagreements over an achievable valuation for the Beijing-based rival of WeWork Cos. Inc., Reuters reported Dec. 12, citing two people with direct knowledge of the matter.
In a prospectus recently filed with the U.S. Securities and Exchange Commission, the Chinese co-working space provider named Haitong International Securities Co. Ltd., China Renaissance Securities (Hong Kong) Ltd., The Core Securities Co. Ltd., Prime Number Capital LLC and CRIC Securities Co. Ltd. as the underwriters for its IPO on the New York Stock Exchange, despite earlier filings listing Citigroup and Credit Suisse as the leads for the IPO.
One of the unnamed sources said there was a big difference between what Ucommune wanted to achieve and current market conditions, adding that pressure for a higher value also came from some investors that recently took stakes in Ucommune.
Another source said the two banks had concerns over the quick timeline to complete the IPO, with Ucommune seeking to list as early as January.
In recent weeks, at least one adviser had warned Ucommune that it was likely to get a lower valuation from the offering as compared to its prior valuation, but the company did not heed the advice, one of the sources said.
Ucommune was valued at US$2.6 billion following a US$200 million fundraising in November 2018. The company did not disclose the size of its IPO in the prospectus, but sources previously told Reuters that it is seeking about US$200 million from the offering.
The formerly named UrWork did not immediately respond to a request for comment, while Citi and Credit Suisse declined to comment on the matter, the news outlet reported.