SoftBank-backed OneConnect slashes IPO by 28%, lowers target valuation

(Reuters) – Ping An Insurance’s OneConnect Financial Technology on Wednesday downsized its planned U.S. initial public offering by 28% and lowered its target valuation, dealing yet another blow to its investor SoftBank (9984.T), which is still reeling from the fallout of WeWork’s failed listing.

OneConnect set a price range of $9 to $10 per share for its initial public offering of 26 million shares, down from the $12 to $14 per share range it had set earlier.

The company also downsized the offering from 36 million American depositary shares (ADSs) to 26 million ADSs.

OneConnect, a unit of China’s biggest insurer by market value, Ping An Insurance Group Co of China Ltd, counts Japan’s SoftBank and Japanese financial firm SBI Group as some of its main investors.

The upper end of the price range values OneConnect at about $3.64 billion.

That is well below its $7.5 billion valuation last year when it raised $750 million in its maiden funding round from investors including Japan’s SoftBank and Japanese financial firm SBI Group.

The float comes as tech investor SoftBank smarts from the abandoned share sale of major portfolio firm WeWork, as well as its first quarterly loss in 14 years dragged down by an $8.9 billion hit at its giant Vision Fund, through which it invested in OneConnect.

Several other potential stock market listings have been pushed back since the collapse of WeWork’s planned launch in September and investment bankers are concerned that the trend may continue next year.

Some 44 companies have pulled their U.S. IPO registrations in 2019 as of Dec. 3, up almost 50% from 2018 and the highest level since 2016, according to IPO research firm Renaissance Capital.

“I think this (the recent turbulence in capital markets) will cause some companies to pause on IPO plans, especially those with weak unit economics and not a clear path to profitability – they will delay IPOs or start to pursue sale opportunities instead,” said Kristine Di Bacco, a partner at Canadian corporate law firm Torys LLP.

“I think really good companies (Airbnb, for example) will not be deterred and will still plan to IPO.”