Beijing’s WeWork Rival Ucommune To Go Public In US

Ucommune, a China-based coworking WeWork rival worth about $3 billion, is going to file an initial public offering (IPO) in the United States this year, according to a report by the Financial Times.

The move is happening in the wake of WeWork’s failed attempts to go public, as well as the high-profile ousting of its CEO. Ucommune is based in Beijing and was part of a $200 million funding round last year.

The coworking space company reportedly filed a confidential prospectus for an IPO with the Securities and Exchange Commission (SEC), and it wants to get a listing before the year is over. Citigroup, Credit Suisse and Bank of America are reportedly going to work on the deal, but neither the banks nor Ucommune would comment for the FT report.

A person familiar with the deal said Ucommune has “monetised the business better than WeWork,” according to the report.

WeWork withdrew its IPO plan in September, and it got rid of Chief Executive Officer Adam Neumann shortly after. WeWork’s major investor, SoftBank, has now taken control.

There is some contention between Chinese companies and the American government, and a bill was recently introduced in Congress that would delist companies for not opening their books to U.S. regulators. The bill also asks that all Chinese Communist party officials on the board of a company be identified.

Ucommune has been successful, and it was reportedly looking for a $200 million U.S. IPO. The coworking space company is supported by Beijing Xinpai Group, and it has a partnership with RK Properties.

Vacancy rates across 17 cities in China stand at 21.5 percent.

“China’s co-working space has seen a great expansion over the last three to five years, but the barriers to entry are low and it’s a hard space to be in,” said James MacDonald, director of China Research at Savills Property Services.

Despite the oversupply of office space, Jonathan Wright, head of flexible workspace services in Asia for Colliers, the real estate company, said that “we still have a bullish view on the flexible workspace sector as a whole. [There are] quite a lot of opportunities for operators, both established Chinese operators and international players.”