The US-based co-working space, WeWork is facing a tough time ever since its IPO plans shelved. In a bid to support nine-year-old organization, a series of moves have been taken--stepping down of Adam Neumann, former CEO of WeWork, commissioning two joint CEOs and restructuring the firm, to name a few. Recently, SoftBank Group, one of the largest stakeholders of WeWork, has taken a move to save the company from collapsing, reported The Wall Street Journal (WSJ).
After postponing IPO plans, The We Company, the parent firm of WeWork, has become cash strapped now. The firm was deciding to raise billions of funds from IPO to continue its business operations. With Softbank’s stride, Neumann, who demoted to Non-Executive Chairman, will be removed from exercising operations and business at WeWork, reported WSJ.
Keeping the Business Afloat
Besides the SoftBank’s pitch, the company is working on the plans to raise debt funds through a process being carried by global investment banking and financial services provider, JP Morgan Chase and Co, reported the cited media agency.
“WeWork has retained a major Wall Street financial institution to arrange financing. Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week,” a spokesperson of The We Company said an interview with Reuters.
A Strategic Bid by SoftBank
At present, the Japanese conglomerate firm, SoftBank holds nearly one-third stakes of the office rental firm. With this current bid, the Japenese investor would pump in billions of funds in debt as well as equity.
SoftBank Group is already grappling to begin its $100 billion second Vision Fund. Financial unsoundness of The We Company along with the poor performance of other SoftBank-funded firms such as Uber and Slack are destroying the company’s ambitions with the second Vision Fund, the primary fund was pegged at $100 billion and initiated in 2017 to infuse in potential startup firms.
If the global investor’s bid gets approval, then it will not only secure The We Company from the fall but also build its reputation by developing the office rental firm into a financially stable firm. Apart from converting WeWork into a performing asset, the Japanese investor will also get fair chances that it still holds potential in making its handpicked firms into gold. Further, it might attract investors from its second round of Vision Fund if the picture goes well.
Similar to WeWork, the ride-hailing company, Uber is restructuring its business after facing immense losses since its IPO launch. The company has reportedly lost $5.2 billion in the past three months, reported The Verge. To remold the business, the company recently laid off 350 employees in India. With this, the employee lay off count has increased to 1,200 in Uber across the globe.