WeWork's IPO put on hold because investors don't seem interested

Daniel Fowler
September 11, 2019

The company is continuing to talk to its biggest investor, SoftBank Group Corp., about whether the Japanese technology giant would put in additional capital through the IPO by buying a significant portion of the shares on offer or invest a chunk of money that would allow We to delay its IPO until 2020.

Last week, The Journal reported that WeWork was considering an IPO at the $20 billion mark, less than half of the $47 billion private valuation it secured earlier this year. We Company also declined to comment during the quiet period ahead of the IPO.

The WSJ noted that the We company was planning to raise $3 billion to $4 billion in the IPO and up to $6 billion in debt that is contingent on the IPO raising at least $3 billion.

WeWork's management is reportedly preparing to approach investors who might be interested in acquiring the company's shares, even though some investors want the real estate firm to postpone its IPO.

Putting WeWork's offering on hold would disrupt that schedule at a time when SoftBank is seeking funds from investors for a second Vision Fund, for which it says $108 billion in pledges have been secured.

The other source said the valuation was unlikely to be as low as that and both cautioned that no final decisions have yet been made and the plans around valuation and timing were all still subject to change. WeWork's S-1 revealed that the company is not profitable- in 2018 The We Company generated $1.8 billion in revenue but suffered $1.9 billion in losses.

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However, it pointed out that some investors have still indicated interest in the IPO and the newspaper said it is possible the company will pull it off at an offering at a valuation of $20 billion or higher.

The pressure follows signs that outside investors do not value the much-hyped firm as highly as SoftBank did when it invested previous year.

The company rents office space for the long-term, subletting that space to firms and individuals on more flexible lease terms.

A lower valuation would be a blow to SoftBank, forcing it to write-down its investment.

Tech conglomerate SoftBank has burned through much of the $100 billion raised by its first Vision Fund in just two years, recording big paper gains on internal revaluations of its tech investments.

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