Subscriptions for the initial public offering of Changzhou Youon Public Bicycle System began on Monday, in what will be the first listed bike-sharing company in China after it floats on the Shanghai Stock Exchange.
According to its prospectus, Youon is offering 24 million shares at an offer price of 26.85 yuan ($4) per share. The IPO aims to raise 644.4 million yuan, which would value the group at $384 million.
The proceeds will be used to build a technology research and development center, supplement its finances for manufacturing and managing public bicycles and pay down debt, the company said in the prospectus.
Youon's Chairman Sun Jisheng said during a road show on Friday that the company will expand the number of its users and roll out other green transportation services later with the public offering.
"We will explore value-added services for the public bicycle system, extending from offline to online and seek new profitability for the company and the industry," he said.
Founded in 2010, Youon has attracted 20 million members nationwide and rolled out 890,000 public bikes in more than 210 Chinese cities and counties. Its major investors include Shenzhen Capital Group and Alibaba Group's Ant Financial.
Differing from the high flying public bicycle-sharing companies such as Ofo and Mobike, which install smart locks in their bicycles and have no requirements for parking areas, Youon focuses on public bicycles with fixed locking poles and designated parking lots.
The company provides its bicycle sharing services in cooperation with governments. These services contributed 100 percent to the company's income in 2014 and 2015. That number slightly dropped to 99.88 percent by the end of last year as it tapped into the public bicycle sharing services, similar to that offered by Ofo and Mobike.
While Ofo and Mobike have estimated their market caps at $3 billion and $2 billion respectively, more than 10 times that of Youon, neither has shown any interest yet in going public. Mobike founder Hu Weiwei said during the World Economic Forum in We will explore value-added services for the public bicycle system ..."
Sun Jisheng, Youon's chairman late June that it is too early to think about a listing.
To qualify for a listing on the Shanghai bourse, a company needs to make profits of over 30 million yuan over the last three financial years. Youon posted net profits of 68 million yuan, 93 million yuan and 117 million yuan in 2014, 2015 and 2016 respectively. Ofo and Mobike have yet to post a profit.
Wang Chunhuan, an analyst with Industrial Securities, said that Youon has a clear and sustained profit model. The company focuses on third-tier and lower-rung Chinese cities and counties while Ofo and Mobike target mainly younger generations in first-and second-tier cities.
"Given the differences in their business models, Youon will be little affected by the rising public bicycle sharing businesses in China," he said.
According to China Internet Network Information Center, there were 106 million public bicycle sharing users by June. Analysts at the center said the industry has begun to restructure, with smaller players eliminated from the competition and a trend towards fewer and larger players in dominance.