- WeDoctor plans to raise US$700-800 million from Hong Kong IPO
- Credit Suisse was among underwriters of Luckin Coffee IPO in May
Credit Suisse has dropped out as a sponsor of a planned listing by Tencent-backed WeDoctor, a person familiar with the matter said on Monday, allowing more Asia-based investment banks to grab a role in the deal.
The Swiss bank's move is a blow to Hangzhou-based WeDoctor's plans to raise US$700 million to US$800 million in a Hong Kong listing, the person added. The decision comes as lawyers and regulators scrutinise the bank's work for the listing of Luckin Coffee in May last year.
Shares of the Chinese coffee chain, billed as a rival to Starbucks, plunged to a record low last week after the company said its chief operating officer Jian Liu and other employees fabricated sales, rendering its 2019 accounts unreliable.
Credit Suisse was among the underwriters of Luckin Coffee's Nasdaq IPO last year. The Chinese company and has been hit by multiple lawsuits from shareholders. Luckin Coffee's IPO other bookrunners were Morgan Stanley and China International Capital Corporation and Haitong. KeyBanc Capital Markets and Needham were co-managers.
A Credit Suisse spokeswoman declined to comment on the bank's roles in WeDoctor and Luckin Coffee's IPOs. WeDoctor did not respond to an emailed request for comment.
Western investment banks may become more risk-averse and demand higher fees for putting their reputations on the line for clients or reject deals outright. Citigroup pulled out of an IPO for Chinese real estate company Fangdd Network late last year after a disagreement over fees.
Luckin Coffee, China's Starbucks wannabe, sees Nasdaq stock plunge as executive is suspended for making up sales figures
Such cases may create an opening for Asian investment banks who have more resources in China to get to know the operations of Chinese clients and are hungry to build market share, industry sources said.
"The reliability of financial data of firms in emerging markets, including China, is always in doubt despite being audited by reputable global firms," said Stuart Witchell, a managing director at risk consultancy firm Berkeley Research Group. Clients fear businesses hit by the coronavirus pandemic may be tempted to siphon off assets and misappropriate funds, he added.
Chinese companies preparing a listing that have not yet appointed a full roster of sponsors and bookrunners include JD Logistics, China Bohai Bank and Hillhouse Capital-backed liquid detergent maker Blue Moon, people familiar said.
Shanghai overtakes Hong Kong as world's top IPO market
While JD.com has picked Bank of America and UBS to sponsor its secondary listing in Hong Kong, the company has yet to appoint bookrunners for the deal, they said.
WeDoctor, founded by Jerry Liao and his team in 2010, selected Credit Suisse, JPMorgan and CMB International as its IPO sponsors earlier this year. The IPO timing is uncertain as it prioritises efforts to help the government overcome the pandemic.
The National Healthcare Security Administration included internet-based diagnosis and treatment into the social insurance payment system on August 30. The National Health Committee, which is responsible for helping formulate health policies in mainland China, stressed the importance of telemedicine in February.
Ping An Good Doctor reports jump in users amid coronavirus, smaller than expected annual loss
WeDoctor provided about 777,000 online consultations between January 23 and 30, according to a spokesperson. Consultations usually cost 19 to 29 yuan but are currently offered free of charge if related to the coronavirus.
The company competes with Ping An Healthcare and Technology which is also known as Ping An Good Doctor, Health Link, Miaoshou and Good Doctor Online, among others.
WeDoctor completed a US$500 million private share sale in 2018, valuing the start-up at US$5.5 billion. Insurance major AIA Group and tycoon Henry Cheng Kar-shun's infrastructure conglomerate NWS Holdings were among the investors. WeDoctor also counts Fosun International, Goldman Sachs and Hillhouse among its investors.
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