IPO Update: AgiiPlus Seeks $39M US IPO (Pending: AGII)

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A fast version of AgiiPlus

AgiiPlus (AGII) has filed an application to raise $39 million in gross proceeds from the sale of its Class A common stock in an initial public offering, according to an amended registration statement.

The company offers co-working, leasing and design options for companies and individuals in China.

Given the various external risks facing the company, its lack of gross profit break-even, and continuing high operating losses, I am on hold for AGII’s IPO.

AgiiPlus Overview

AgiiPlus, headquartered in Shanghai, China, was founded to use an asset-light model to lease flexible office/co-working facilities while providing enterprise software solutions as an integrated option.

The management is headed by founder, chairman and CEO, Dr. Jing Hu, who has been with the firm since its inception in 2016 as Shanghai Distrii and was previously at Greenland Holdings, including as executive vice president and chief architect, where he led 20 real estate development projects. .

The company’s main offerings include:

  • Leasing of workspaces – Marca Distrii

  • Design and construction of spaces – Spacii brand

  • Brokerage and Business Services – Tangtang

As of June 30, 2022, AgiiPlus has reserved a $58 million fair market value investment from investors including City Connected Communities Pte, J.distrii Global, China Lodging Holdings, King Inspiration, Junzi Holding and Ningbo Nayun.

AgiiPlus – Customer Acquisition

The firm markets its service offerings through its internal business development efforts and partner referrals.

The company had 60 locations in six cities in China and one location in Singapore as of December 31, 2021.

Selling expenses as a percentage of total revenues have fallen to 9.5% as revenues have increased, as the figures below indicate:


Expenses vs Income



Six months. Ended June 30, 2022






(Source – SEC)

The sales efficiency multiple, defined as how many dollars of additional new revenue is generated for every dollar of sales spend, increased to 2.8 times in the most recent reporting period.


Efficiency rate



Six months. Ended June 30, 2022




(Source – SEC)

AgiiPlus Market and Competition

Based on a 2020 market Investigation report by Ken Research, the flexible workspace market in China was estimated to grow at a CAGR of 38.3% between 2018 and 2025.

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However, the report was completed before the start of the COVID-19 pandemic, which has had a negative impact on the industry since its inception.

While the industry is making a comeback in regions that were unaffected by recent closures, future growth in demand may come not only from expansion but also from consolidation through mergers and acquisitions along with an increase in revenue from additional services.

Major competitors or other industry participants include:

  • Regus

  • ucommunity

  • my dream+

  • Space Kr

  • soho

  • compass offices

  • People2

  • Atlas

  • service office

  • The Executive Center

  • Others

AgiiPlus financial performance

The company’s recent financial results can be summarized as follows:

  • Growing top line revenue

  • Reduced gross loss

  • Reduced negative gross margin

  • High operating losses

  • Growing cash flow from operations

Below are the relevant financial results derived from the firm’s registration statement:

total income


total income

% variance vs. previous

Six months. Ended June 30, 2022








Gross profit (loss)


Gross profit (loss)

% variance vs. previous

Six months. Ended June 30, 2022








Gross margin


Gross margin

Six months. Ended June 30, 2022






Operating profit (loss)


Operating profit (loss)

Operating margin

Six months. Ended June 30, 2022




$ (43,779,000)



$ (32,928,000)


Net income (loss)


Net income (loss)

Net margin

Six months. Ended June 30, 2022









Cash flow from operations


Cash flow from operations

Six months. Ended June 30, 2022






(Glossary of terms)

As of June 30, 2022, AgiiPlus had $17.7 million in cash and $522.6 million in total liabilities.

Free cash flow for the twelve months ended June 30, 2022 was negative ($3.6 million).

AgiiPlus IPO Details

AGII intends to sell 8.7 million shares of Class A common stock at a proposed average price of $4.50 per share for gross proceeds of approximately $39.15 million, not including the sale of customary subscription options.

Class A common shareholders will be entitled to one vote per share and Class B shareholders will be entitled to 15 votes per share.

The S&P 500 Index no longer supports companies with multiple classes of shares in its index.

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No existing shareholders have indicated interest in buying shares at the initial public offering price.

Assuming a successful initial public offering at the midpoint of the proposed price range, the company’s enterprise value at the initial public offering (excluding subscription options) would be approximately $354 million.

The ratio of free float to outstanding shares (excluding subscription options) will be approximately 9.64%. A figure below 10% is generally considered a ‘low float’ stock that may be subject to significant price volatility.

According to the company’s most recent regulatory filing, it plans to use the net proceeds as follows:

approximately 25% to 30%, or $8.8 million to $10.6 million to improve our technology capabilities;

approximately 55% to 60%, or $19.3 million to $21.2 million for business expansion, including organic growth of our geographic coverage and M&A opportunities, although we have not identified specific investments or acquisition opportunities right now; Y

approximately 10% to 20%, or $3.5 million to $7.1 million for other operating purposes.

(Source – SEC)

The company roadshow management presentation is available here until the initial public offering is completed.

Regarding pending legal proceedings, management said the firm is currently “engaged in ongoing litigation with Zhonglian Runshi over a lease agreement.”[…for] payment of rent, damages and other types of expenses totaling approximately RMB24.30 million (US$3.81 million).’

The IPO’s sole listed book broker is US Tiger Securities.

Feedback metrics for AgiiPlus

Below is a table of the company’s relevant valuation and capitalization metrics at the IPO, excluding the effects of underwriting options:

Measure [TTM]


Market capitalization at IPO


company value


Price / Sales


EV / Income




earnings per share


Operating margin


Net margin


Ratio of float to shares outstanding


Average price per share proposed for the initial public offering


Net Free Cash Flow


Free cash flow yield per share


Capital Expenditure Ratio


Revenue growth rate


(Source – SEC)

Comment on AgiiPlus

AGII is seeking investment in the US public capital market to fund its corporate growth initiatives and general working capital needs.

The company’s financials have produced increased gross income, decreased gross loss, reduced negative gross margin, increased operating loss, and increased cash flow from operations.

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Free cash flow for the twelve months ended June 30, 2022 was negative ($3.6 million).

Selling expenses as a percentage of total revenue fell to 9.5% as revenue increased; its sales efficiency multiple was 2.8x in the most recent reporting period.

The company does not currently plan to pay dividends and intends to retain any future earnings for reinvestment in the company’s growth and operating initiatives.

AGII’s Twelve Month CapEx Ratio indicates that it has spent heavily on capital expenditures as a percentage of its operating cash flow.

The market opportunity to provide flexible office space and related services in China is large, but is experiencing major turbulence due to ongoing lockdowns in regions affected by the COVID-19 virus and government policies.

Like other companies with operations in China looking to tap into US markets, the company operates within a WFOE or wholly foreign-owned entity structure. US investors would only have an interest in an offshore company with interests in operating subsidiaries, some of which may be located in the PRC. In addition, there may be restrictions on the transfer of funds between subsidiaries within China.

The Chinese government’s recent crackdown on IPO-candidate companies, combined with additional information and disclosure requirements from the US, has put a serious damper on Chinese or related IPOs, resulting in poorer post performance. -OPI generally poor.

Potential investors are advised to consider the potential implications of specific laws regarding the repatriation of profits and changing or unpredictable Chinese regulatory rules that may affect such companies and US stock prices.

US Tiger Securities is the only underwriter and there is no data on the company’s participation in the initial public offering for the last 12 months.

The main risk to the company’s outlook is the unpredictable Chinese regulatory environment, as well as the potential for COVID-19 lockdowns from China’s zero-COVID policy.

As for the valuation, management asks investors to pay approximately 4.5x EV/Revenue as the company continues to generate negative gross profit and core earnings growth begins to slow.

Given the various external risks facing the company, its lack of gross profit break-even, and continuing high operating losses, I am on hold for AGII’s IPO.

Expected IPO Price Date: TBA

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