WeWork 'looking to raise billions in debt ahead of IPO'

Above: Mr Adam Neumann, co-founder and chief executive of WeWork, which has helped pioneer "co-working" or shared desk space. Right: New York-based WeWork's outlet at Suntec City Tower 5. PHOTO: WEWORK
Above: New York-based WeWork's outlet at Suntec City Tower 5. PHOTO: WEWORK

Move comes after disappointing market debuts by Lyft and Uber

NEW YORK • Shared office space manager WeWork Cos is looking to raise US$3 billion (S$4.1 billion) to US$4 billion in debt before it goes public, a person familiar with the matter said on Sunday, in a move aimed to fuel investor confidence in the company.

The potential debt offering underscores the extent to which the disappointing public market debuts for Uber Technologies and Lyft have prompted other loss-making start-ups with lofty valuations looking to go public to reassess their plans.

Uber and Lyft went public earlier this year with high expectations but both faced criticism from investors about their steep losses and lack of a timetable to reach profitability.

Money-losing WeWork has faced questions about the sustainability of its business model, which is based on short-term revenue agreements and long-term loan liabilities.

A substantial debt offering could allow it to pitch itself to potential investors in a planned initial public offering (IPO) as having sufficient funding to see itself to profitability.

The money raised via the debt offering, which will be separate from the funds WeWork would receive in an IPO, could grow to as much as US$10 billion over the next few years, the source said, cautioning that there is still no certainty the offering will ultimately materialise.

WeWork has met the chief executives of investment banks Goldman Sachs and JPMorgan Chase & Co to discuss the debt offering, the source said. Representatives for WeWork, Goldman Sachs and JPMorgan declined to comment.

The Wall Street Journal had earlier reported news of the potential debt offering.

WeWork, which earlier this year was rebranded as The We Company, has filed paperwork for an IPO.


Above: Mr Adam Neumann, co-founder and chief executive of WeWork, which has helped pioneer "co-working" or shared desk space.

The We Company said in May that losses narrowed slightly in the first quarter, from a year earlier, to US$264 million. The company was recently valued at US$47 billion in a private fund-raising round.

WeWork, which was co-founded in 2010 by chief executive officer Adam Neumann, has helped pioneer "co-working," or shared desk space, with a focus on start-ups, entrepreneurs and freelancers.

To date, the New York-based company has raised around US$8.4 billion, according to data provider PitchBook.

In January, Japan's SoftBank boosted its stake in WeWork by US$2 billion, in a deal that was billions of dollars below what the company had hoped to raise to fund growth and buy out existing shareholders.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 09, 2019, with the headline 'WeWork 'looking to raise billions in debt ahead of IPO''. Print Edition | Subscribe