Following Canaan, OneConnect Cuts its IPO Ambitions in Half

OneConnect Financial Technology, a unit of China’s major insurer Ping An, aims to raise up to USD 504 million in an initial public offering (IPO), compared to USD 1 billion, reportedly considered in June this year.

The IPO was launched yesterday after the company reduced both its target offering size and valuation, according to their updated prospectus with the U.S. Securities and Exchange Commission.

OneConnect is focusing on fintech and blockchain-powered finance, and says it operates 50 blockchain finance labs. The company claims to have registered at least 274 blockchain patents in China.

The company is selling 36 million American depositary shares (ADSs) at a range of USD 12 – USD 14 a share.

The price range values OneConnect at between about USD 4.5 billion and USD 5.5 billion in its long-awaited public offering, Reuters reported, citing unidentified people with knowledge of the matter. Last year, the company was valued at USD 7.5 billion, when it raised USD 750 million from investors including Softbank and SBI Group.

OneConnect initially had a fundraising goal of as much as USD 3 billion last year, before an increasingly volatile market forced it to push back the listing, Bloomberg reported. Meanwhile, in June, sources told Reuters that the company was eyeing a valuation of about USD 8 billion and an IPO of up to USD 1 billion.

Ping An tempered its valuation expectations after OneConnect’s business performance wasn’t as strong as initially projected, one person familiar with the matter told Bloomberg.

“Following the flops of Uber and WeWork, to name but a few, investors have been a lot firmer on pushing back on valuations, pushing companies to scale down their fundraising ambitions,” the report added.

OneConnect had revenue of CNY 1.55 billion (USD 218 million) in the first nine months of 2019, or 72% more than a year ago, while its losses almost doubled, reaching CNY 1 billion, according to the prospectus.

OneConnect’s bookbuilding will run until December 12. It is due to begin trading on December 13 on the New York Exchange under the symbol “OCFT,” Reuters added.

The company is also included in the Fintech100 list by H2 Ventures and KPMG, which also features 13 crypto/blockchain-related entities.

Meanwhile, as reported, another Chinese giant, Canaan, the second largest producer of Bitcoin (BTC) mining equipment, completed its IPO on November 21, raising USD 90 million, or less then estimated, and four times less than it planned in October. Their share price dropped below the IPO price in the first hours of trading and is still trading below the USD 9 mark.

At the same time, their main rival, Bitmain is also reportedly working on its own IPO.