Softbank to Face Valuation Cut in OneConnect IPO

(Bloomberg) -- Masayoshi Son, head of Japanese conglomerate Softbank, is facing another valuation cut in one of his investments.

Ping An Insurance’s OneConnect Financial Technology Co. launched its $500 million U.S. initial public offering on Tuesday at a much reduced valuation compared with its last funding round in which SoftBank participated in 2018. This latest sale comes just a couple of months after the investment powerhouse saw the value of one of its most high-profile investments, WeWork, tumble from $47 billion to less than $8 billion.

OneConnect, which provides cloud computing and other technology services to small- and medium-sized financial institutions, is marketing shares at a valuation of about $4.4 billion to $5.2 billion based on the deal size before an over-allotment option of up to 15%, according to Bloomberg calculations based on an overnight filing. That’s a steep drop from the $7.5 billion OneConnect was valued at when it raised $650 million from investors including Softbank and SBI Group.

Investors had pushed back against the company’s proposed valuation, Bloomberg News reported last week. OneConnect had been gauging whether fund managers would accept an enterprise value equivalent to ~8-10x estimated sales, people familiar with the matter said.

OneConnect declined to comment.

The company’s down round -- raising funds at a lower valuation than the previous fundraising -- comes at a delicate time for Softbank whose deal-making prowess has come under pressure after its WeWork fiasco and backing of other loss-making companies like Uber Technologies Inc. that have fallen in value from their IPOs. The way how investment profits at Softbank is accounted for has also drawn scrutiny.

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.

OneConnect initially had a fundraising goal of as much as $3 billion last year, before an increasingly volatile market forced it to push back the listing. Ping An tempered its valuation expectations and may offer a smaller stake in the company after OneConnect’s business performance wasn’t as strong as initially projected, one person familiar with the matter has said.

SoftBank has placed bets on companies under the state-linked insurer Ping An, as part of its play in combining technology and insurance. Vision Fund invested in Ping An Good Doctor, which was spun off and floated last year.

UPCOMING LISTINGS:

• Postal Savings Bank of China
  • Shanghai exchange
  • Size $4.1b
  • Taking orders Nov. 28; listing date TBA
  • Citic Securities, CICC, China Post Securities, UBS Securities
• Uni-Charm Indonesia
  • Jakarta stock exchange
  • Size up to $106.2m
  • Pricing Dec. 3, listing Dec. 20
  • Nomura, PT Sinarmas Sekuritas
• Venus MedTech
  • Hong Kong exchange
  • Size up to $331m
  • Pricing Dec. 4; listing Dec. 10
  • Goldman Sachs, CICC, Credit Suisse, China Merchants Securities
• China Merchants Commercial REIT
  • Hong Kong exchange
  • Size up to $383m
  • Pricing Dec. 3; listing Dec. 10
  • Citigroup
• Alphamab Oncology
  • Hong Kong exchange
  • Size up to $234m
  • Pricing Dec. 6; listing Dec. 12
  • Morgan Stanley, Jefferies, CLSA
• Renrui Human Resources Technology
  • Hong Kong exchange
  • Size up to $140m
  • Pricing Dec. 6, listing Dec. 13
  • BNP Paribas
• XD Inc
  • Hong Kong exchange
  • Size up tp $128m
  • Pricing Dec. 5, listing Dec. 12
  • CLSA
• Bangkok Commercial Asset Management
  • Thailand stock exchange
  • Size $887m
  • Listing Dec. 16
  • Trinity Securities, Kasikorn Securities, UBS

• Chison Medical Technologies

  • Shanghai Star board
  • Size $150m
  • Priced Nov. 19; listing TBA
  • Sinolink Securities

More ECM situations we are following:

• China Bohai Bank Co., a mid-sized lender part-owned by Standard Chartered, has picked lead banks for a planned Hong Kong initial public offering that could raise more than $2 billion, according to people familiar with the matter.
• Iskandar Waterfront Holdings Sdn. is considering an initial public offering as early as next year, partly to help fund the $33.5 billion Bandar Malaysia project, according to people with knowledge of the matter.
• Private equity firm Advent International and Singapore state investment company Temasek are offering to sell 44.85m shares of Crompton Greaves Consumer Electricals Ltd., according to terms for the deal obtained by Bloomberg.

SEE ALSO

• Asia ECM Weekly Agenda
• IPO data
• U.S. ECM Watch
• EU ECM Watch
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--With assistance from Lulu Yilun Chen.

To contact the reporter on this story: Julia Fioretti in Hong Kong at jfioretti4@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Margo Towie

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