SoftBank Wants WeWork To Abandon IPO Plans

WeWork’s biggest outside shareholder wants the company to shelve plans for an initial public offering (IPO).

Sources said that SoftBank made the recommendation after receiving a cool reception from investors, according to the Financial Times.

It was reported this week that WeWork would be moving ahead to roll out an investors’ roadshow as it looks for an IPO as early as next week. The IPO was reportedly deemed controversial after U.S. discussions estimated it could be valued at just slightly more than $20 billion — less than half of its $47 billion valuations following January’s fundraising round.

WeWork’s parent company, We Company, has also come under scrutiny from both investors and analysts over its governance, as well as payments made to Co-Founder and Chief Executive Adam Neumann and its use of a complicated corporate structure.

Both We Company and SoftBank declined to comment, and sources said that no final decision on beginning the roadshow has been taken. Plans are still subject to change. If the listing is shelved, the We Company would lose out on a $6 billion loan from a group of banks, including JPMorgan Chase and Goldman Sachs, that was contingent on the IPO raising at least $3 billion.

The New York-based company lost more than $900 million in the first half of 2019, up 25 percent from a year earlier, even though its revenue doubled to $1.54 billion, as it burned through cash to expand.

It launched a multibillion-dollar valuation with its business model of renting out spaces, but now wants to expand into owning the buildings as well. It has revealed that it is starting a “global real estate acquisition and management platform” to purchase stakes in buildings that it plans to lease, according to a press release. The fund will be called ARK and will start with $2.9 billion of total equity capital.