By: Jessica Zlotbaum
WeWork Cos. has arranged to borrow lots of money for its expansion. But in a typical deal, banks only need to follow through on their commitments if the New York-based firm collects a minimum of $3 billion in its initial public offering.
WeWork has set up $6 billion in financing, the financial press is reporting, and was sitting down with analysts last week to talk about its grand strategy in advance of its IPO.
The firm is working to borrow money, according to Crain’s New York Business, citing sources, via a $2 billion letter-of-credit facility and a $4 billion delayed-draw term loan.
“The New York-based venture, which rents furnished office space to companies and freelancers, has been looking for ways to fund its expansion around the world, potentially investing in a broad array of businesses and properties, such as apartments and schools. Pressure on the company mounted after Japan’s SoftBank Group Corp. backed off a plan late last year to pump $16 billion of equity into the startup,” according to Crain’s. “The new financing round may give WeWork more discretion when setting the size of its IPO, which Bloomberg reported last week may raise $3.5 billion in September.”
Reuters has reported that WeWork owner The We Company has chosen JPMorgan Chase & Co to lead the debt offering, “putting the bank in pole position to lead a planned initial public offering (IPO) later this year, people familiar with the matter said. WeWork would like work on the debt offering to begin as early as next week, although this is subject to change as there are regulatory hurdles to be cleared, the sources said.”
The company’s global ambitions are in full display. In late July, executives announced a $500 million Series B investment in WeWork China led by Trustbridge Partners, Temasek, SoftBank and the SoftBank Vision Fund, and Hony Capital.
This was the second major round of funding for WeWork China. The first—a $500 million investment from SoftBank and Hony Capital announced last summer—was dedicated to fueling WeWork’s growth and expanding its operations throughout China.
“This investment will help WeWork fuel our mission to support creators, small businesses, and large companies across China,” said CEO and cofounder Adam Neumann in a statement. “WeWork has built an incredible team in China that supports our members every day, serving as a bridge for local companies who want to reach the world as well as for global companies that want to enter the Chinese market.”
