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As WeWork China continues to cut costs globally, Trustbridge Partners has invested $200 million to own a majority stake in the company. As a result of the investment, a Trustbridge Partners’ executive becomes CEO.
WeWork recently sold the majority stake in its China business to a group led by investment firm Trustbridge Partners. The new sale is one of the office space provider’s efforts to cut global costs. Though WeWork now has a minority stake in its Chinese business, it will continue to receive an annual license fee.
WeWork China started in 2016 and has expanded across 12 cities in more than 100 locations. In China, WeWork said it currently has more than 65,000 customers. Globally, WeWork has spread across 150 cities, 38 countries, and 843 locations. Some of its tenants include Alibaba and Tencent.
WeWork CEO Sandeep Mathrani said:
“WeWork China has built a business that has cemented WeWork’s position across the region as the market leader in flexible space.”
Since the pandemic began, WeWork has been struggling as many of its members have embraced remote work. In addition, the global economic meltdown has taken its toll on the office space provider.
WeWork China Sells Majority Stake
In 2018, Trustbridge Partners-backed WeWork China in its Series B funding. Now, Trustbridge has paid $200 million to own a majority stake of WeWork’s Chinese unit. According to a report by The Wall Street Journal, a source said that the deal includes a traditional franchise model, and Trustbridge Partners is taking over operational control of WeWork China.
The source also said that WeWork would maintain a board seat with a minority stake in its Chinese business. As of last year, WeWork held a 59% stake in its Chinese business. A representative of WeWork China also said that Trustbridge Partners will now take over “decision making and management, product, and business, through to operations and productivity.”
As a result of the latest investment, the Chinese arm now has a new chief executive officer. Trustbridge’s operating partner Michael Jiang was appointed as the acting CEO. Before joining Trustbridge Partners, Jiang was a senior vice president of leading e-commerce platform Meituan-Dianping in China.
“This latest investment will enable WeWork China to continue supporting the diverse and growing ecosystem of entrepreneurs, medium-sized businesses, and enterprise companies across the region.”
More on WeWork China
In addition, a WeWork spokesperson said that WeWork China would continue to work together with its global headquarters. Speaking to the media, the spokesman added that the cooperation ensures that WeWork continues to satisfy its members and employees globally.
The managing partner at Trustbridge Partners, Feng Ge, commented on the new development:
“…Trustbridge is confident of the growing demand for space-as-a-service as companies in Greater China continue to grow and maximize the unprecedented growth opportunities ahead.”
In the first quarter of 2020, WeWork surpassed a nine-figure revenue. In the quarter, the company hit a revenue gain of $1.1 billion. Also, WeWork reported an addition of 89 locations.
In the second quarter, Reuters reported that WeWork’s revenue reached $882 million. This is a 9% increase year-over-year. Also in the quarter, WeWork reported 612,000 members, a 12% decrease from the first quarter’s 693,000 members. The company also reported an increase of 15% in the number of its buildings.