Hedge Fund Margin Call Aftershocks... US Compass Drastically Lowers Valuation

[Asia Economy Reporter Yujin Cho] Compass, a U.S. real estate brokerage app backed by SoftBank's Vision Fund, has seen its valuation halved ahead of its listing on the New York Stock Exchange (NYSE), Bloomberg reported on the 31st (local time).

According to the listing documents submitted to the U.S. Securities and Exchange Commission (SEC) on the same day, Compass plans to issue 25 million common shares at a public offering price of $18 to $19 per share, raising up to $475 million. This is about half of the initial target valuation of $936 million.

Bloomberg assessed that the margin calls on hedge fund Archegos Capital and the continued decline of tech stocks in the New York stock market are also impacting the initial public offering (IPO) market.

This market uncertainty is considered a factor that could undervalue the premium of a mobile real estate brokerage app entering the stock market.

Compass was previously valued at approximately $6.4 billion during its investment round with SoftBank Vision Fund in 2019. The SoftBank Vision Fund holds 35% of Compass's Class A shares.

According to the performance report submitted by Compass to the SEC, the company's revenue last year was $3.7 billion, a 56% increase compared to the previous year. The annual net loss was $222 million, a reduction from the $388 million loss the year before.

Compass has facilitated 275,000 housing transactions cumulatively, with a total transaction amount of $300 billion.

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