Published: Fri, September 20, 2019
Markets | By Otis Pena

WeWork delays IPO until end of 2019

WeWork delays IPO until end of 2019

In an effort to push its IPO through the market despite hard resistance, WeWork has made extraordinary concessions to investors to improve the marketability of its offering. WeWork had planned to begin making its pitch to investors in a roadshow as soon as this week.

The US co-working giant is now planning to complete its float by the end of this year.

Investors fear that WeWork's business model may not be sustainable and have voiced concerns about its governance under Adam Neumann, who founded the company in NY in 2010 with his wife Rebekah. "We want to thank all of our employees, members and partners for their ongoing commitment", the company said in a statement.

WeWork has suffered through a turbulent IPO process, with its valuation first falling to $20 billion and now to an expected $10-$15 billion. "And it would have been a blow to its biggest backer, Japan's SoftBank Group Corp., at a time when it is trying to amass $108 billion from investors for its second Vision Fund". Ultimately, until we know WeWork's final valuation and offering terms (with the rate of change in these IPO plans outpacing any other, it's hard to tell where these will land), we can't be certain whether WeWork will be a buy or a bust. We Company secured a $6bn credit line from banks last month but can only access this if WeWork floats before the end of the year and raises at least $3bn.

The company's $669 million of bonds due in 2025 dropped as much as 7.3 cents on the dollar to 95.5 cents Tuesday in NY, according to the Trace bond-price reporting system.

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WeWork's $47 billion valuation has raised more than a few eyebrows among public investors. The facility requires the company to carry out its IPO by 31 December. And in the latest blow to WeWork's IPO plans, its biggest investor SoftBank has reportedly suggested that the company put the brakes on going public.

Any choice eventually rests with the endeavor's prime supporter and CEO, Adam Neumann, who keeps up democratic control through a three-class offer structure and has been a determined defender of the IPO, the individuals said.

The delay also adds another sour note to a medley of high-profile but frequently disappointing IPOs this year. Previously valued at $48 billion in an early fundraising exercise, WeWork had ended up settling for a much milder $15 billion to $20 billion valuation, if not lower, according to sources familiar with the matter. Some have called WeWork the most overvalued start-up in history, claiming it is an unprofitable real estate company marketing itself as an innovative tech firm.

It isn't clear what, exactly, made Neumann and Co. change their minds, but CNBC reports that the decision to delay came amid fears that the stock would be "snubbed" by investors if it hit the Nasdaq this week, as originally planned.

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