WeWork value jumps to $42bn as SoftBank provides more backing
New York-based office sharing outfit WeWork was valued at a mammoth $42bn as it agreed another major investment from Japanese conglomerate SoftBank.
The private company secured $3bn extra funding from SoftBank late on Tuesday in the form of a warrant to provide $1.5bn of cash in January and granting the Japanese bank the right to buy WeWork shares for $110 apiece if the startup goes public, raises another $1bn in funding or gets acquired any time before September 2019.
The co-working outfit, which operates an “asset-light” model and leases most of its workspace locations, was valued at around $20bn when SoftBank made its initial $4.4bn investment back in 2017 and has raised a total of $10.67bn to date, of which $8.65bn has come from the Japanese company.
With its new $42bn valuation, WeWork has leapfrogged Airbnb and SpaceX but is still a long way short of Uber's $72bn.
Chief financial officer Artie Minson referred to the funding as being “opportunistic”.
"The way we work with SoftBank emphasises speed and getting it done quickly," he said. "That speaks to the overall momentum in the business."
While WeWork did not provide details regarding its third-quarter performance, its first ever release of financial results in August showed it made a net loss of $723m in the first half of 2018 as revenue in the second quarter of the year rose to $421.6 from $198.3m a year before.
WeWork, which counted 268,000 'members' at the end of June using its platform across 24 countries, revealed on Tuesday that 50% of its desks were now outside of the US and that its occupancy had hit 84%. In September, the platform became the biggest office occupier in Manhattan, having achieved the same feat in central London earlier in the year.
The company, which is known for offering unlimited free beer on tap at its sites, instituted limits to members' beer consumption at its New York City flagship location in light of inappropriate office behaviour becoming somewhat of a hot button topic at tech firms and follows a lawsuit from a former employee that took aim at WeWork's corporate culture.
The company had cash of around $4bn available at the end of June, boosted by $500m recently raised in China, a $1bn convertible debt commitment from SoftBank and $600m in prior commitments from its Japanese backer.
In April, the company's $702m senior unsecured bond offering in April was rated by credit agency Fitch at BB-, by S&P at B and Moody's at Caa1, before withdrawing its rating.