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Hong Kong property

Ucommune makes fifth acquisition this year as it seeks to battle co-working space rival WeWork in China

PUBLISHED : Thursday, 18 October, 2018, 11:06am
UPDATED : Thursday, 18 October, 2018, 10:36pm

Ucommune said on Thursday it has acquired competitor Fountown for an undisclosed amount, marking the fifth acquisition the Beijing-based co-working space unicorn has made this year.

Fountown operates 26 co-working offices in Beijing and Shanghai, which would bring Ucommune’s offices in Beijing to 88 and in Shanghai to 42. Ucommune has offices in 37 cities across the globe in total, including New York, Hong Kong, Taipei and Singapore among others.

“The macro environment has seen significant shifts in the past three years. We have seen greater uncertainty in the economy and an increasingly competitive environment with the arrival of new entrants,” said Mao Daqing, founder and chairman of Ucommune, in a company statement. “Therefore, mergers and acquisitions are necessary for leading companies to maintain their competitive advantage and stay relevant to clients’ requirements,” he continued.

But Mao is positive about the future of co-working businesses in China, given “the increasing momentum of urbanisation, upgrades to the service-based economy and urban renewal.” Co-working space has grown in popularity globally amid a rapid rise in new digital economy start-ups and a need for more flexible and creative work spaces. Real estate is typically the second-largest operating expense for a company, excluding staff wages.

WeWork gets another US$1 billion from Softbank

Ucommune, which competes with US co-working giant WeWork in China, was previously known as UrWork. Ucommune announced in August that it raised 300 million yuan (US$44 million) in pre-series D financing, which valued the company at US$1.8 billion. Ucommune has acquired four China-based co-working start-ups before Fountown – Wedo, Workingdom, Woo Sapce and New Space.

Mao told the Post in an interview in May that he would consider an IPO for the three-year-old firm, possibly in Hong Kong in the coming two to three years. I want Ucommune to be independent, so an IPO is certainly an option,” he said. “But I am not against the idea of being acquired,” he said in the interview.

Although mainland China has always been Ucommune’s priority, the company has recently attempted expansion in Asia by setting up two offices in Singapore. It is also planning to open two offices in Hong Kong soon.