WeWork will reportedly shelve its IPO in a 'last-minute decision' after weak investor interest
- WeWork has delayed its IPO, according to Reuters.
- The shared-workspace group was gearing up for an investor roadshow this week and a public debut this month, but made a "last-minute decision on Monday to stand down," Reuters said, citing people familiar with the matter.
- Key investor SoftBank discussed kicking in between $750 million and $1 billion to support the IPO, but WeWork determined it would still have raised less than the $3 billion needed to unlock a $6 billion credit line.
- Read all of BI's WeWork coverage here.
WeWork has delayed its IPO, according to Reuters.
The shared-workspace group was gearing up for an investor roadshow this week and a stock-market debut this month, but made a "last-minute decision on Monday to stand down," Reuters said, citing people familiar with the matter.WeWork postponed due to concerns not enough investors would participate in its listing, the sources told Reuters. It plans to complete it later this year.
"The We Company is looking forward to our upcoming IPO, which we expect to be completed by the end of the year. We want to thank all of our employees, members and partners for their ongoing commitment," WeWork said in a statement to Markets Insider.
The group's largest investor, Japanese conglomerate SoftBank, discussed kicking in between $750 million and $1 billion to support the IPO, the sources told Reuters. However, WeWork determined a listing would have raised little more than $2 billion even with SoftBank's help, Reuters reported. That would be short of the $3 billion it needs to unlock a $6 billion credit line. The bank financing is also contingent on an IPO by the end of this year.
WeWork has faced growing concerns about its path to profitability, the sustainability of its business model, and its corporate governance. The doubts have led the company to slash its targeted public valuation to as low as $10 billion to $12 billion, according to Reuters - a far cry from the $47 billion public valuation it secured in January.
The group reported a net loss of about $1.6 billion last year, almost matching its roughly $1.8 billion in revenue. Its strategy - signing long-term leases for properties then dividing them up, renovating them, and offering short-term rentals - could suffer during an economic downturn.
Adam Neumann's control of WeWork, large stock sales, property deals, and family members' involvement in the business have also raised flags, leading the group to announce sweeping changes to its governance last week.