OneConnect Financial Technology (OCFT) and Canaan Creative (CAN) could give the US IPO market a timely boost after the Chinese companies announced intentions to hold $100m initial public offerings before the end of the month.
Operational management enterprise OneConnect was spun out from Ping An Insurance Group two years ago and has been backed by prolific holding company SoftBank Group who owns stakes in Alibaba (NYSE:BABA), Slack Technologies (NYSE:WORK) and WeWork among others.
OneConnect provides financial tech solutions to SMEs in China and it saw its revenue soar 72% to $222m on a gross margin of 33% during the first nine months of 2019 — although operating losses did increase to $160m.
It now wants to improve cash flow and support expansion with a deal run jointly by a host of big banks including Bank of America Securities, J.P. Morgan, Morgan Stanley and Goldman’s Asia division.
OneConnect is unconcerned by the 18-month long hostilities between the US and China on trade and has opted to list on the New York Stock Exchange under the NYSE:OCFT ticker.
OCFT did raise the prospect of a Hong Kong listing in early 2019 when a $1bn float was mooted, which would have increased the company’s valuation to around $8bn, but a much more modest $100m offering has now been greenlit.
Chinese bitcoin miner, Canaan, has also set its sights on a stateside listing after filing updated IPO forms to the US Securities and Exchange Commission (SEC) in midweek.
The Hangzhou-based company was founded six years ago and has grown to be a world leader in mining equipment manufacturing where it specialises in blockchain and ASIC microprocessor solutions.
Canaan posted a $45m net loss in H1 2019 but rebounded into the black with a $13m profit on $95m group revenues in Q3.
Canaan currently has a 23.3% share of the mining machine market, which is almost two-thirds less than its main rival Bitmain (64.5%), a Beijing-headquartered chipmaker with its own plans for a US IPO in the near future.
Canaan has a head start for now as a 20th November public debut date for the deal, underwritten by seven firms including Credit Suisse and Citi Group, was confirmed this week.
It will offer 10m equity shares at a $9–$11 range for $100m proceeds at the mid-range and a potential $1.5bn diluted market cap.
The latest offering is more conservative than the $400m float it proposed in late October, which was its third attempt to get an IPO off the ground following postponements in China and Hong Kong.
Companies based in those two regions have accounted for 24 of the 158 IPO listings in the US so far this year, raising $3.05bn in the process. However, just three are now trading above the initial range.