Portfolio

WeWork delays IPO until end of 2019

By Caoimhe Toman

Date: Tuesday 17 Sep 2019

WeWork delays IPO until end of 2019

(Sharecast News) - WeWork has delayed its stock market listing until the end of the year amid growing investor concerns over its corporate governance, valuation and the outlook for the business.
The outfit, which was recently rebranded as We Company, had been due to begin its drive to market the office sharing firm to investors - a practice known on Wall Street as a 'road trip' - possibly as early as the present week in the run-up to a listing in October.

Now, We Co. was aiming to complete its offering by year-end 2010 amid reports that it had moved to rein in chief executive and founder Adam Neumann's control over the company via special classes of shares, among other measures aimed at bolstering its corporate governance controls.

"Today's decision to defer the launch of its much anticipated IPO appears to be borne out of concern that its valuation is still way too high, as well as concern over its governance structure, and the financial linkages with its CEO Adam Neumann," said Michael Hewson, chief market analyst at CMC Markets UK.

"The We Company is looking forward to our upcoming [initial public offering], which we expect to be completed by the end of the year. We want to thank all of our employees, members and partners for their ongoing commitment," the company said in a statement.

Softbank, the company's largest investor, participated in a January funding round which valued We Co. at $47.0bn (£38.0bn) but reports indicated it was more likely to fetch a valuation closer to $15-18.0bn if not less.

"With the company losing $2 for every $1 it makes, even a valuation as low as $15.0bn and $18.0bn hasn't been enough to whet investor appetite, particularly since a number of this year's unicorns are now languishing below their IPO launch prices," said Hewson.

A delay in the IPO past 31 October might also reportedly scupper plans for a $6.0bn credit line provided by a consortium of lenders which had been contingent on We Co. successfully completing a flotation in 2019.

The firm was however still set to receive a $1.5bn capital injection from SoftBank in 2020 as part of an earlier agreed transaction.

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