WeDoctor Reportedly Removes Credit Suisse From IPO After Luckin Scandal
The online health care solutions provider may now look towards Asian investment banks.
The online health care solutions provider, WeDoctor has dropped Credit Suisse from the list of underwriters on its $1 billion initial public offering over concerns from the Swiss banks' management of the IPO of Luckin Coffee (Nasdaq: LK).
The Hangzhou-based company will now allow it to look for more Asia-headquartered banks, as lawyers and regulators have scrutinized Credit Suisse's work on Luckin's IPO in May 2019, as the South China Morning Post reported on Monday. The coffee chain has been hit hard in the last week, as the company has allegedly fabricated $314 million in sales.
Law firms have gotten in on the action, as Luckin now faces a slew of investigations. As of Monday in early trading, shares of Luckin have tumbled more than 80% since world of the scandal hit the street.
"WeDoctor's executives have concerns over Credit Suisse's role in Luckin-related deals. Given uncertainty over the outcome, the bank is probably no longer suitable to work on WeDoctor's IPO," a person with direct knowledge of the situation told Reuters.
WeDoctor, backed by the tech giant Tencent Holdings Ltd., (HKEX: 0700) selected JPMorgan and CMB International as its underwriters on its IPO along with Credit Suisse earlier this year. In 2018, WeDoctor raised $500 million in a private share sale, giving it a valuation of $5.5 billion.
According to industry sources from the SCMP, Asian investment banks have more resources in China, are more knowledge of Chinese clients, and are "hungry" for the market share.
"The reliability of financial data of firms in emerging markets, including China, is always in doubt despite being audited by reputable global firms," Stuart Witchell, a managing director at risk consultancy firm Berkeley Research Group said.
Despite multiple reports saying Credit Suisse has been dropped, a final decision hasn't been made, according to Reuters.