Telecommunications and internet group SoftBank has invested $2bn in US-based workspace provider WeWork, which has rebranded to The We Company, at a $47bn valuation, Fast Company reported today.
WeWork runs shared workspaces in cities in 30 countries, where users can access office equipment, high-speed internet, meeting rooms and free coffee under short-term flexible agreements. It made a $1.22bn loss in the first nine months of 2018 from $1.25bn in revenue.
News of the deal came as WeWork restructured itself into a business known as The We Company which will consist of WeWork itself as well as a residential accommodation-focused division known as WeLive and WeGrow, which is currently running an elementary school and coding academy, CEO Adam Neumann told Fast Company.
The funding came from SoftBank itself rather than the $98.6bn Vision Fund it manages, two people briefed on the deal had already confirmed to the Financial Times.
Already a significant investor in WeWork, Vision Fund had in October 2018 considered acquiring a majority stake in the company by buying out all its other investors for $10bn and injecting up to $6bn of additional funding to support growth.
However, reports last month stated that the fund’s limited partners, which consist of technology manufacturers and Middle Eastern sovereign wealth funds, strongly opposed the idea.
A November 2018 investor presentation by SoftBank stated that it planned to invest $3bn in the company through warrant financing over two tranches in January and April this year at a valuation of at least $42bn. The warrant financing is separate to the $2bn investment.
Reports in October suggested SoftBank owned a 20% stake in WeWork having initially invested $300m in early 2017 at a reported $17bn valuation. It subsequently joined Vision Fund to provide $3bn in a July 2017 primary and secondary share purchase.
The $3bn came in addition to $1.4bn that went into WeWork subsidiaries in China, Japan and the Asia Pacific area. SoftBank supplied a further $1bn in convertible note financing for the company in August 2018, increasing its overall debt and equity financing to $9.5bn.
WeWork had previously raised $690m in series F funding from Legend Capital, the venture capital firm set up by conglomerate Legend Holdings, as well as hospitality operator Shanghai Jin Jiang International and private equity firm Hony Capital in 2016.
Fidelity Management and Research, T. Rowe Price, Goldman Sachs, JP Morgan Investment Management, Benchmark and clients of Wellington Management are also among WeWork’s earlier investors.
This article was amended on January 9 to reflect the confirmation of the investment and The We Company’s rebranding.
