China’s OneConnect US IPO not going according to plan

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Major exchanges in the U.S. are starting to see attention from blockchain-based companies, but things aren’t going the way they anticipated. Chinese cryptocurrency mining equipment manufacturer Canaan Creative completed its initial public offering (IPO) on the NASDAQ exchange, falling well short of its $400 million goal. This time, a blockchain and artificial intelligence (AI) company hopes it can do better, but isn’t getting off to a great start either.

OneConnect Financial Technology is a subsidiary of China’s largest insurance company, Ping An Insurance. It launched its $500-million IPO on Tuesday on the New York Stock Exchange in hopes of receiving as much as $500 million; however, it has already reported a lower valuation than what had been expected.

Some 36 million American depository shares will be available at a per-share price of between $12-$14, according to a filing with the Securities and Exchange Commission (SEC). Working the numbers shows that the valuation is right around $4.5-$5.2 billion, which is significantly lower than the $7.5 billion valuation seen in February of last year. At that time, the company opened a funding round that saw it raise $650 million from several deep-pocketed investors, including SBI Group and SoftBank.

OneConnect specializes in tech solutions for financial institutions. It helps small- and medium-sized entities innovate their platforms to include blockchain, biometrics identification, AI and more, and is working to expand in a global financial ecosystem that has become somewhat resistant to change.

This past June, according to a report by Reuters, the company was looking at an IPO of around $1 billion and a valuation of $8 billion. To help bolster its efforts, it decided to move its offering to the U.S. from Hong Kong, where ongoing government protests have led to market instability.

The lower valuation and expectations don’t necessarily mean things are in bad shape. OneConnect reported revenue of $218 million across the first nine months of this year, which is a 72% increase over the same period last year. However, it also suffered greater losses—almost double—between the two periods. Regardless, it is still confident in its abilities, which are being supported by Morgan Stanley, JPMorgan and Goldman Sachs, and is pushing forward. The IPO will run until December 12, with OneConnect going live under the ticker symbol OCFT the next day.