WeWork looking to go public as early as September: source

Joshua Franklin, Herbert Lash

2 MIN READ

(Reuters) - Shared office space manager WeWork is looking to go public as soon as September, earlier than previously expected, a person familiar with the matter told Reuters on Tuesday.

FILE PHOTO: The WeWork logo is displayed on the entrance of a co-working space in New York City, New York U.S., January 8, 2019. REUTERS/Brendan McDermid

The company is expected to make its initial public offering paperwork public in August, the person said.

The developments were first reported earlier by the Wall Street Journal.

WeWork declined to comment.

WeWork will host an analyst day for Wall Street banks on July 31 as part of preparations for its IPO, Reuters reported last week.

WeWork is also looking to raise $5 billion to $6 billion through a bond offering before the IPO, the source added, requesting anonymity because the matter is private. This is more than it had previously been looking to raise.

The debt offering could provide comfort to those investing in the IPO who might be concerned that the cash burn at WeWork is so great it will need to raise more money after the initial offering, which would dilute their shareholdings.

“That’s a very known psychology by underwriters and IPO investors, and (that fear), that’s something people try to guard against,” said Adam Troso, head of real estate corporate advisory at Greenhill & Co in New York.

WeWork was recently valued at $47 billion in a private fundraising round, making it one of the most valuable private companies in the world.

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

The losses at WeWork’s parent company narrowed slightly in the first quarter of 2019 to $264 million as revenue continues to double annually.

(http://www.autoadmit.com/thread.php?thread_id=4308684&forum_id=2#38578134)

https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm

(http://www.autoadmit.com/thread.php?thread_id=4308684&forum_id=2#38685916)

WeWork parent The We Co. did not disclose how many shares it plans to sell or set an indicative price range. The company used a $1 billion placeholder for the proposed maximum aggregate offering, a number that is subject to change and used to calculate the registration fee.

The filing with the SEC comes after WeWork in April said it had amended a confidential draft of an IPO registration statement, after first filing confidentially with the regulator in December.

The year so far has seen a handful of other closely followed private giants take their companies public after years of racking up private financing. The top “unicorn” companies of 2019 — a term for startups valued at $1 billion or more — have featured ride-hailing giant Uber and its smaller rival Lyft, image-sharing site Pinterest Inc., and smaller business software firms.

WeWork has an estimated private valuation of $47 billion, according to venture capital database CB Insights Corp., which would rank it as the second highest valued company to go public in 2019. Uber went public in May with a private valuation at the time of about $72 billion.

WeWork could make its public debut after Labor Day. The company is eligible to start marketing its IPO to investors on Aug. 29, by when it would likely reveal more specific deal terms. The marketing process typically lasts about 10 days, culminating in an IPO.

Venture-backed WeWork leases shared workspaces to startups, touting its flexible offerings for entrepreneurs and freelancers. The company serves 111 cities in 29 countries, according to its registration statement, and hopes to launch services in an additional 169 cites.

“We are changing the way people work globally and, in the process, we have disrupted the largest asset class in the world — real estate,” WeWork said in its registration statement filed Wednesday with the SEC.

But like many of this year’s high-profile IPOs, WeWork is also not profitable. The company reported a $1.9 billion net loss in 2018, while revenue more than doubled to exceed $1.8 billion.

“Our accumulated deficit and net losses have historically resulted primarily from the substantial investments required to grow our business, including the significant increase in recent periods in the number of locations we operate,” WeWork told the SEC. “We expect that these costs and investments will continue to increase as we continue to grow our business.”

WeWork is also going public with a multiclass share structure, a set up that would leave existing shareholders including CEO and co-founder Adam Neumann with outsize voting power.

The company plans to sell the public Class A shares that carry one vote per share, while reserving additional sets of Class B and Class C shares that carry 20 votes per share.

WeWork’s existing Class A shareholders also include entities affiliated with venture capital firm Benchmark, technology investor Softbank, and investment bank J.P. Morgan.

WeWork plans to trade under the symbol “WE.” It has yet to select a stock exchange.

WeWork is represented by a Skadden Arps Slate Meagher & Flom LLP team led by partners Graham Robinson, Laura Knoll, and Ryan Dzierniejko

The underwriters are represented by a Simpson Thacher & Bartlett LLP team led by partners Roxanne Reardon and John Ericson and associates John O’Connell, Evan Zuckerman, Essete Workneh and Adriana Estor-Restrepo.

(http://www.autoadmit.com/thread.php?thread_id=4308684&forum_id=2#38685933)

(http://www.autoadmit.com/thread.php?thread_id=4308684&forum_id=2#38754462)

The company is insanely valued because its buyers see it as a silicon valley tech company. Still I find its general vision or concept for living and work spaces to be sound and something being put in practice by a lot of players in real estate development.

(http://www.autoadmit.com/thread.php?thread_id=4308684&forum_id=2#38754487)

Anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent.

(http://www.autoadmit.com/thread.php?thread_id=4308684&forum_id=2#38805772)