SoftBank investing another $4.2b in WeWork

A WeWork co-working space in New York (above). The company plans to open more than 100,000 new office desks for rent this quarter, the same number it opened all of last year, after securing a big cash infusion from its largest investor SoftBank (left
A WeWork co-working space in New York.PHOTOS: NYTIMES, AGENCE FRANCE-PRESSE
A WeWork co-working space in New York (above). The company plans to open more than 100,000 new office desks for rent this quarter, the same number it opened all of last year, after securing a big cash infusion from its largest investor SoftBank (left
The company plans to open more than 100,000 new office desks for rent this quarter, the same number it opened all of last year, after securing a big cash infusion from its largest investor SoftBank ( above).PHOTOS: NYTIMES, AGENCE FRANCE-PRESSE

NEW YORK • Co-working office company WeWork has expanded rapidly over its eight-year lifespan, due in part to huge investments from Japan's SoftBank.

On Tuesday, it secured another big cash infusion from its largest investor.

WeWork announced that SoftBank had committed an additional US$3 billion (S$4.2 billion) at a valuation of at least US$42 billion.

That is more than double the US$20 billion level that WeWork attained in its last fund raising over a year ago, and makes it one of the most valuable privately held venture-backed companies in the United States.

SoftBank is injecting the new cash in exchange for a warrant to buy additional shares in WeWork.

The deal highlights the costs of WeWork's empire-building.

It is not only expanding rapidly around the world, but also moving beyond its primary business of leasing and reselling office space into education, apartments and more.

 
 
 

The company said on Tuesday that it has 297,000 available desks in 24 countries and plans to open more than 100,000 new office desks for rent this quarter, the same number it opened all of last year.

WeWork said it generated US$1.25 billion in revenue for the first nine months of this year, and was on pace to exceed US$2 billion in sales by the year end.

Still, to fund its expansion, WeWork needs money. The company also disclosed on Tuesday that it lost US$1.22 billion through the first nine months of this year, after losing US$933 million last year.

Earlier this year, it issued US$700 million worth of bonds.

One question is whether such losses would affect investors' appetite for a WeWork initial public offering (IPO).

WeWork president Arthur Minson declined to comment on the potential timing for an IPO, but contended that the company could start making money if it stopped its breakneck expansion. For now, that is not under consideration.

"We're going to continue to focus on the opportunity ahead," he said in an interview.

Helping to subsidise WeWork's ambitions is money from SoftBank, which already owned a nearly 20 per cent stake in WeWork.

Tuesday's commitment leaves unclear the state of WeWork's discussions to sell more of itself to SoftBank. Just last month, the two companies discussed SoftBank's taking a majority stake in WeWork.

Mr Minson declined to comment on the matter.

SoftBank has become one of the most prolific technology investors after it raised its nearly US$100 billion Vision Fund last year to take stakes in transformative tech companies.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on November 15, 2018, with the headline 'SoftBank investing another $4.2b in WeWork'. Print Edition | Subscribe