WeWork Buys China Co-Working Start Up naked Hub for Reported $400M

Global co-working giant WeWork is acquiring Shanghai-based naked Hub for a reported $400 million with the two parties issuing a joint statement today.

“China-born naked Hub and WeWork may come from vastly different backgrounds, but there is more that binds us than separates us,” naked Group Founder and Chairman Grant Horsfield said in a statement.  “As we look to the future together, I am excited to build on the success we have had and to continue to provide amazing experiences for our China community.”

While the flexible office groups did not specify terms of the deal, an account by investment news portal China Money Network, said the transaction price was $400 million.

“In naked Hub, we have found an equal who shares our thinking about the importance of space, community, design, culture, and technology,” WeWork co-founder Adam Neumann said in a blog post on the company’s website. “Together, I believe we will have a profound impact in helping businesses across China grow, scale, and succeed.”

The move would represent WeWork’s first major acquisition in China as the $20 billion New York-based startup strives to expand its portfolio in the country and outcompete rivals including mainland flexible office firm Ucommune. WeWork’s China unit will conduct the acquisition through cash and equity, according to the report.

US Co-Working Giant Adds Dozens of China Centres

Founded by luxury resort brand naked Group in November 2015, Shanghai-based naked Hub currently has a platform of about 50 co-working centres open or under development in mainland China, Hong Kong, Vietnam, Australia and most recently, London. The firm backed by Hong Kong’s Gaw Capital Partners operates 23 flexible office centres in the first-tier mainland cities of Shanghai and Beijing, as well as three locations in Hong Kong.

With its portfolio of 328 global locations already featuring a combined ten centres in Shanghai and Beijing at present, WeWork is now eyeing second-tier cities in mainland China. In February, WeWork announced plans to expand into Shenzhen, Suzhou, Hangzhou, Xiamen, Chengdu, Nanjing, Xi’an and Wuhan this year.

Meanwhile, WeWork’s biggest centre in the world, providing 4,500 work stations, is poised to launch in the Xintiandi neighbourhood of downtown Shanghai this year. WeWork finalised the lease on an entire 10-storey, 27,000 square metre office tower for the centre in December.

China Acquisition Part of WeWork’s Asia Expansion

The reported acquisition would represent WeWork’s biggest step forward in Asia since last July and August, when it announced $4.4 billion in total investments from Japan’s SoftBank and Vision Fund to drive its expansion in the region. The infusion of capital included a $500 million investment in the US firm’s China vehicle, WeWork China, along with investments in South Korea, southeast Asia and Japan.

WeWork also acquired Singapore-based shared office operator Spacemob last August as part of its $500 million southeast Asia and Korea push.

The naked Hub deal also expands WeWork’s Asia Pacific footprint via naked Hub’s presence in Vietnam and Australia, after the Shanghai-based firm acquired Aussie flexible office outfit Gravity in January. That deal gave naked Hub a 70 percent stake in  Gravity, which operates three co-working venues in Sydney, Melbourne and Brisbane.

The acquisition followed naked Hub’s purchase of local rival Raise Office, which owns four centres in Shanghai, in December. The acquisition comes just six months after naked Group chairman Grant Horsfield said last October that the company would seek a public listing within a few years.

naked Hub is currently setting up its first centre outside Asia Pacific. The London space at 123 Buckingham Palace Road owned by Gaw Capital is expected to open in July.

Move Would Sharpen Rivalry with Ucommune

The integration of naked Hub with WeWork would present a challenge to Chinese rival Ucommune, the Beijing-based firm formerly known as UrWork, which currently boasts a portfolio of 160 locations across 35 cities.

”I think it’s reasonable that companies sharing similar cultural genes and development strategy merge together for further growth,” commented Mao Daqing, founder and chairman of Ucommune in a statement on the reported WeWork deal. “This will by no means cause big shake-up for domestic coworking market. Ucommune will remain committed to our globalisation strategy and we foresee major moves on M&A front from our side in the near future.”

Ucommunie has also embarked on an acquisition spree in China, gobbling up three flexible office competitors in 2018 alone. In mid-March, the company acquired Beijing-based startup Woo Space to boost Ucommune’s customer base, which now numbers 100,000 members and more than 6,000 corporate members. The move came just two months after Ucommune closed on the purchase of mainland flexible office operator New Space, a deal that was first announced last May.

Less than two weeks after taking over Woo Space, Ucommune announced that it would acquire Shenzhen flexible office operator WeDo in order to strengthen its presence in southern China’s second-biggest city in late March.