Phoenix Tree Set to Lift Off at $13.50 in Downsized Offering

The co-living spaces provider in China, Danke, raises less than anticipated in its IPO on Friday despite a number of early subscribers.

CapitalWatch Staff
    Jan 17, 2020 6:00 AM  PT
Phoenix Tree Set to Lift Off at $13.50 in Downsized Offering
author: CapitalWatch Staff   

Phoenix Tree Holdings Ltd. prepares to debut on the New York Stock Exchange today in a downsized initial public offering worth $129.6 million.

The company, operating in China's real estate rental space, sold 9.6 million American depositary shares at $13.50 apiece. That's below the expected range of $14.50 to $16.50 per share and the 10.6 million ADSs Phoenix Tree targeted last week.

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Earlier, Renaissance Capital reckoned the company could raise as much as $300 million.

Three of the company's shareholders, Antfin (Hong Kong) Holding Ltd., Internet Fund IV Pte. Ltd. (an affiliate of Tiger Global Management LLC) and Joy Capital may acquire a cumulative $75 million worth of ADSs in the offering. In addition, an undisclosed strategic investor has indicated interest in acquiring $25 million in ADSs, according to a Wednesday filing with U.S. Securities and Exchange Commission.

Underwriters are Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, and J.P. Morgan Securities LLC. They may purchase up to an additional 1.4 million ADSs upon the IPO. In such case, the proceeds from the offering will increase to $149 million.

Founded in 2015, Phoenix Tree operates one of the largest co-living platforms in China known as "Danke." As of September, Phoenix Tree operated 406,746 apartments, according to its prospectus. It reported revenue of $699.5 million and losses of $352 million for the nine months through September 2019.

The company said it aims to use the proceeds from the IPO for expansion and apartment renovation, as well as boosting its technology. It also seeks to invest in general corporate purposes, including branding and marketing and potential acquisitions.

Phoenix Tree is set to commence trading on the NYSE Friday under the symbol "DNK."

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