(Yicai Global) Aug. 21 -- Ucommune, the Chinese shared workspace provider that earlier this month withdrew plans for a US initial public offering, has now applied to join the Nasdaq through a backdoor listing.
The loss-making startup intends to go public through Orisun Acquisition, a special purpose acquisition company based and listed in New York, The Paper reported today, citing a prospectus the Beijing-based company submitted yesterday with the US Securities and Exchange Commission.
Orisun said on July 6 that it had reached a merger deal with Ucommune. A month later, the Chinese firm said it was ditching arrangements for an initial sale of shares because of prevailing capital market conditions. The combination would create an entity worth USD769 million. That’s about USD2.2 billion less than Ucommune’s peak value of USD3 billion in 2018.
A so-called backdoor listing, or reverse merger, offers a faster and easier route to market listing than a conventional IPO. A special purpose acquisition company is a relatively new tool for this in which a number of parties jointly set up a firm that raises funds in an IPO and uses the proceeds to buy businesses or assets later. The SPAC is wound up if the merger or acquisition does not close within 12 to 18 months.
Orisun is a shell company formed and registered in Delaware in October 2018.
Five-year-old Ucommune earned CNY167 million (USD24.2 million) in the first nine months of 2017, CNY449 million in the same period in 2018, and CNY875 million in the first three quarters of last year, per its earnings reports. But its losses are widening. The firm lost CNY372 million in the first nine months of 2017, CNY445 million in the first three quarters of 2018 and CNY573 million in the same span last year. Since 2017, it has lost over CNY1.3 billion (USD188.2 million).
The losses stem from huge outlays on expanding office spaces, restructuring and acquisitions, according to Ucommune. It has 211 offices in China and Singapore.
Incumbent Chief Development Officer and Chief Financial Officer Cheong Kwok Mun will serve as the merged firm's chairman and CFO, per the prospectus.
Editor: Ben Armour