WeWork Of China Prepares For New York IPO

With WeWork on life-support after a failed IPO in September led to a near-collapse of the flexible-office startup, the Chinese version of WeWork, called Ucommune, is set to go public on the New York Stock Exchange in January, reported The Wall Street Journal. 

Ucommune is the largest co-working firm in China, operates 171 co-working spaces and 72,700 workstations. It expects to raise $100 million in the upcoming offering and list sometime in the next month. 

Ucommune has an identical business model to WeWork; both obtain long term leases from office buildings, reformat the commercial space with workstations that allow companies to set up shop on a monthly basis.

Top investors in the Chinese version of WeWork include Sequoia Capital, Chinese investment firm Prosperity Holdings, and the U.S. merchant bank RockTree Capital.

WeWork’s failed IPO attempt in September has given Ucommune a unique opportunity to capture WeWork’s limelight of attempting to go public. 

Jonathan Wright, director of flexible workspace consulting for Asia at Colliers International, told The Journal it’s “surprising” that Ucommune would time its IPO so close to WeWork’s implosion. 

“The fact that they’re doing it so soon after WeWork is surprising,” said Wright. 

China Renaissance and Haitong International are underwriting Ucommune, sources told The Journal, this comes after Credit Suisse Group AG and Citigroup Inc. backed out of the underwriting process. 

Ucommune is similar to WeWork, and both have a money-losing business model that rapidly expands flexible workspaces with no clarity on when profitability would be achieved. 

Ucommune had a net loss of $80.1 million on $122.4 million in revenue in the three quarters of 2019.

The company “believes that it will have adequate sources of liquidity and capital resources to support its daily operations for the next 12 months,” the filing said.

And with WeWork on life-support, seen on Tuesday when Goldman Sachs and SoftBank provided the company with a $1.75 billion line of credit as the first step in the company’s bailout package — the Chinese version of itself is attempting to go public in early 2020. It seems that money-losing companies are racing to go public to avoid collapse.