WeWork Said Targeting $3.5B September IPO

Shared offices with attitude and free-flow beer could convert into a $3.5 billion IPO for WeWork within the next two months, according to media reports today, citing sources familiar with the company’s plans.

While WeWork has yet to comment publicly on the slated market debut, the New York-based firm is expected to announce the timing of the IPO in August, according to an account in the Wall Street Journal, which was the first to report the timing of the event.

Should WeWork move forward with the fund-raising plan at the $3.5 billion target figure revealed by Bloomberg, the co-working giant would be pulling off what is expected to be the second largest IPO of 2019, as fears of a 2020 downturn threaten historical highs on US stock markets.

September Target Date

The nine-year-old firm is targetting a September market debut, and is meeting with investment bankers in New York this week, according to the reports, with the IPO plans coming together rapidly after news of the preparations were first reported in April.

In tandem with its scheme for a public equity sale, WeWork has been working on raising debt financing as a way to shore up its cash supply and reassure investors that the company, which lost $1.9 billion last year, will have enough fuel to keep running until it finds a path to profitability.

The company is said to be meeting bankers in New York this week about plans to raise as much as $6 billion through structured, asset-backed loans, after reports in early July had estimated the debt sale at no more than $4 billion.

The asset-backed debt arrangement is said to be connected to the value of WeWork’s leases of commercial office space.

Valuation Remains Unclear

No target valuation has been set for the planned share sale, with the company’s share price remaining murky after its most recent major equity transaction – a two-part stake sale to Softbank Group which closed earlier this year.

In that deal, WeWork’s largest backer Softbank purchased new shares in the company at a $47 billion value, at the same time that it bought equity from WeWork staff and existing investors in a transaction which priced the company stock at $23 billion. The two transactions gave the firm a combined $36 billion valuation through a deal which many analysts read as a consolation prize after a $16 billion investment plan reported last year and set to be led by Softbank’s Vision Fund failed to materialise.

After having notched 2019’s largest IPO in May at $8.1 billion, Uber, which is also backed by Softbank, still trades below its IPO price, giving investors pause about the possible upside in WeWork shares.

Clearing Up Conflicts Pre-Listing

This past week the Wall Street Journal reported that WeWork CEO Adam Neumann had taken $700 million out of the business through sales of shares on multiple occasions, and in an earlier blow to investor confidence, it was reported in January that the company founder was leasing multiple buildings to WeWork that its chief executive owned personal stakes in.

Following the revelation of that potential conflict of interest, the shared office provider in May announced that it was forming ARK, a real estate investment and management platform backed by Canadian fund manager Ivanhoe Cambridge that would purchase the buildings leased to WeWork where Neumann held an interest.

Despite the controversy, WeWork’s expansion in Asia continues this month with the company having announced its first location in Taipei, and the lease of an entire office building in Singapore’s financial district.