Softbank urges Wework to halt float amid investor doubts
Wework’s largest shareholder Softbank is said to be urging the shared office space provider to shelve its initial public offering (IPO) due to a frosty reception from potential investors.
The Japanese conglomerate has put pressure on Wework bosses to postpone the eagerly-anticipated listing following criticism of the firm’s governance, executive pay and complicated structure, the Financial Times reported, citing people briefed on the discussions.
Read more: Wework considers cutting its listing valuation by half
The loss-making property group, which has rebranded as the We Company, is attempting to fend off concerns about how it will turn a profit, despite its rapid growth over the last decade.
Last week it emerged the New York-headquartered firm was seeking a valuation of $20bn (£16.2bn) from its IPO, less than half the $47bn price tag it gained after its last fundraising round.
Softbank and its Saudi-backed Vision Fund have invested more than $10bn into the startup, which is often cited as one of boss Masayoshi Son’s great successes.
But the declining valuation has reportedly taken the shine off Softbank’s interest in Wework, as a disappointing IPO could impact its ability to raise $108bn for its second Vision Fund.
Nevertheless, Wework is set to receive a further $1.5bn in funding from Softbank next year as part of an ongoing agreement.
Wework is understood to want to raise between $2bn and $4bn from its listing before the end of the year.
However, investors have raised concerns about its business model, as the firm pays long-term rent contracts but leases properties to clients on a short-term basis, meaning it could be left exposed if demand dries up.
Read more: Wework adds woman to board after criticism ahead of IPO
Some criticism has also been centred around founder and chief executive Adam Neumann, who has now returned a $5.9bn payment he received from the company for the rights to use the trademarked work ”we”.
Wework and Softbank declined to comment.
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