WeWork Wants to Go Public in September, Sooner than Expected

Shared office space manager WeWork is looking to go public as soon as September, earlier than previously expected. The anonymous source said to Wall Street Journal that the company is expected to make its initial public offering paperwork public already in August. However, from the company, they declined to comment.

The truth is, this New York-based company, valued at $47 billion has been rumored to be planning a massive IPO for a long time by now. It seems now it’s been in the process of meeting with Wall Street banks to secure an asset-backed loan more than $5 billion in what could be an effort to downsize its upcoming stock offering.

Let us just remind you that the company reported huge net losses last year of around $1.9 billion in March on revenue of $1.8 billion.

Banks have been lining up to help organize the fundraising and its size has already swelled. It is attempting to raise at least $1bn more than it had earlier sought through the borrowing. Many investors and advisers, however, expected that the company would wait until later this autumn or even early 2020 to complete its flotation by joining other highly valued venture-backed companies that have recently gone public, such as Uber and Lyft.

Just for a reminder, Uber Technologies Inc.’s $8.1 billion IPO that happened in May is still considered the biggest IPO in 2019. A WeWork offering would put this company before diagnostic equipment maker Avantor Inc.’s $2.9 billion listing in May, currently the second-biggest for the year globally.

Adam Troso, head of real estate corporate advisory at Greenhill & Co in New York said that the debt offering could provide comfort to those investing in the IPO and are concerned that the cash burn at WeWork is so big that it will need to raise more money after the initial offering, which would dilute their shareholdings.

He said:

“That’s a very known psychology by underwriters and IPO investors, and (that fear), that’s something people try to guard against.”

Let’s also not forget that the company’s CEO and co-founder, Adam Neumann, has also been under investigation over some of his business practices, including leasing properties in which he has ownership back to WeWork. Also, two days ago, it was reported that Neumann cashed out some of his stake in the company and took the debt out against his holdings to the tune of $700 million. Since WeWork was founded 9 years ago, Neumann has invested largely in real estate ($80m for 5 homes). His other investments include commercial properties and stakes in startups, including a medical cannabis company.

However, since then, the company has expanded pretty fast with a little help from its friends meaning Japanese telecoms conglomerate SoftBank and investors including T Rowe Price and Fidelity. They now have 485 offices in more than 30 countries, and nearly half a million members.

Neumann, who’s still WeWork’s single largest shareholder, has obviously made it a habit to sell and borrow against some of his holdings in nearly every investment round since 2014. People close to Neumann argue that borrowing against his WeWork shares indicates that he’s more than optimistic of the company’s future.

If the company manage to raise more than $5bn through this new loan facility, it will help its total fundraising go up since 2010 when the company first opened its doors in a single office in New York City to more than $18bn

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