OneConnect, the financial technology arm of China’s biggest insurance company, has cut its expected valuation by about half before a planned stock market debut in the US, in another blow for Softbank’s giant Vision Fund.
The company, part of Shenzhen-based Ping An, said in a stock exchange filing on Thursday that at the top end of an indicated range it would seek to raise $299m at a valuation of $3.6bn.
OneConnect, which sells technology platforms to financial companies, raised $650m at a $7.5bn valuation last year, according to filings by Ping An. Bankers at one time thought OneConnect could raise as much as $2bn in a public listing that was initially earmarked to take place in Hong Kong, but is now set for New York.
It is another setback for Japanese technology group Softbank’s $97bn Vision Fund, adding to a string of bets that have soured in recent months. Those include the failed initial public offering of property leasing company WeWork and a $300m investment into dog-walking start-up Wag. The size of the Vision Fund’s holding is unclear.
“The willingness of shareholders . . . to suffer the humiliation of a massive down round is a red flag,” said Arun George, an analyst at Global Equity Research, in a report on research platform Smartkarma. “The quick succession of the valuation cuts suggests that OneConnect has likely deep underlying issues.”
In a further sign of investors’ coolness toward the listing, a separate Ping An subsidiary has offered to buy up to $100m of the offering.
OneConnect joins a long list of lossmaking companies that have encountered scepticism in the public markets.
Ucommune, China’s largest co-working company, said it would also push ahead with a US listing despite international investment banks abandoning the deal. The company, which posted a net loss of more than $80m for the nine months to September 30, filed for an initial public offering on the New York Stock Exchange on Wednesday.
The FT reported in October that Citigroup, Credit Suisse and Bank of America were among the banks working to take Ucommune public. According to the latest filing, Hong Kong’s Haitong International and China Renaissance are the only sponsors. Wall Street and European banks peeled away from the deal after disagreeing with Ucommune on the deal’s timeline and value, according to two people with knowledge of the matter.
“The whole [co-working] sector is a little scarred from WeWork,” said one person.
WeWork shelved plans for an IPO in September after a tumultuous listing process which began with a $47bn valuation and much fanfare. It ended with a valuation a fraction of the size, rounds of lay-offs and the departure of its chief executive Adam Neumann.
Don Weinland contributed reporting from Beijing
