SoftBank urges WeWork to shelve IPO over valuation concerns: FT

Andrew Cummings
September 11, 2019

SoftBank Group Corp. and its affiliates hold about 29 percent of WeWork stock, Bloomberg reported last week.

SoftBank, whose $100 billion Vision Fund is widely seen as having contributed to frothy tech valuations, has urged We Company to shelve the IPO due to tepid investor demand, the Financial Times reported.

The We Company, WeWork's parent company, has been trying hard in recent times to raise its flotation between $3bn and $4bn.

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.

Some investors are also anxious about skepticism surrounding the company's business model and want its planned initial public offering (IPO) to be pushed to next year, sources said on condition of anonymity.

SoftBank and its Saudi-backed Vision Fund have invested more than $10 billion in WeWork, and CNBC notes that it could face a multi-billion-dollar write-down if WeWork makes it debut with a valuation between $15 and $20 billion.

But an upcoming share offering could put the firm's worth below $20bn, as investors question WeWork's opaque corporate structure, governance and profitability.

The We Firm had last raised money at a valuation of over $47 billion, and the fixed reductions within the Firm's worth might create a self-fulfilling prophecy that pushes the share worth down even further should the company go forward with a public offering.

A WeWork spokesperson told Business Insider: "The company is in a quiet period and will politely decline to comment". WeWork lost about $1.6bn previous year, despite revenue almost doubling.

In the IPO filing released, WeWork said that if there is a requirement to gain profit, it can slow its expansion.

Worries about its IPO valuation have reflected the mounting losses and concerns about how its business model would survive an economic downturn. They added a woman to its board of directors after a lot public outcry over the board composition and unwound an nearly $6 million settlement the company had made with its chief executive over the licensing rights to the brand "We".

Investors are no longer so keen on the hip landlord of office spaces. Showing active participation in the women empowerment motif, We Company has disclosed its plans to introduce a woman to its existing all male board of directors.

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