WeWork pushed back its much-awaited initial public offering, and said it now expects to complete the listing by the end of this year as concerns mount over the company’s governance, valuation and business prospects. WeWork had planned to begin making its pitch to investors in a roadshow as soon as this week.
“The We Co is looking forward to our upcoming IPO, which we expect to be completed by the end of the year,” the company said in a statement on Monday evening in New York. “We want to thank all of our employees, members and partners for their ongoing commitment.”
SoftBank Group, the office rental company’s biggest investor, had pressed WeWork to put off the stock offering amid doubts about the business, people familiar with the matter said previously.
In January, SoftBank made its last investment in WeWork, renamed the We Co, at a valuation of US$47-billion. The company was more recently expected to be valued at only about $15-billion in a listing and perhaps even less, people familiar with the matter have said.
The decision to postpone the listing will at least temporarily sideline an important source of capital for the money-losing business and could threaten a $6-billion credit financing that was contingent on a successful offering. The facility requires the company to carry out its IPO by 31 December.
The biggest backers of SoftBank’s $100-billion Vision Fund are now reconsidering how much to commit to its next investment vehicle after the oversized bet on WeWork soured. Saudi Arabia’s Public Investment Fund, which contributed $45-billion to the gargantuan fund, is now only planning to reinvest profits from that vehicle into its successor, according to people familiar with the talks.
Abu Dhabi’s Mubadala Investment Co, which invested $15-billion in the Vision Fund, is considering paring its future commitment to below $10-billion, the people said, asking not to be identified in disclosing internal deliberations.
The delay also adds another sour note to a medley of high-profile but frequently disappointing IPOs this year. The offering was expected to have been the biggest after Uber Technologies’ $8.1-billion listing and ahead of Avantor’s $3.3-billion IPO and the $2.3-billion offering by Uber’s ride-hailing rival Lyft. Of those three, only Avantor is trading above its offer price.
WeWork has become an extreme example of the excesses afforded to technology entrepreneurs in the era of unicorns — start-ups valued at $1-billion or more. Adam Neumann, WeWork’s co-founder and CEO, was able to raise billions of dollars at astronomical valuations and spend freely, while retaining effective control over operations through special classes of stock.
In an effort to keep its IPO on track, WeWork last week took steps to limit Neumann’s control of the company after an IPO, as well as other measures to improve its corporate governance. — Reported by Gillian Tan, Liana Baker and Michelle F Davis, with assistance from Scott Deveau, Ellen Huet and Sridhar Natarajan, (c) 2019 Bloomberg LP