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WeWork gets $2 billion after Japan's SoftBank cuts planned investment

SoftBank has invested a total of around $10.4 billion in WeWork so far - $4.4 billion in 2017 and $6 billion in 2018 and 2019

Reuters 

The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo. (Photo: Reuters)
The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo. (Photo: Reuters)

said on Tuesday that Japan's SoftBank boosted its stake in the company by $2 billion in a deal that is billions of dollars below what the shared workspace provider had hoped to raise to fund growth and buy out existing shareholders.

The transaction brings Corp's <9984.T> recent investment to $6 billion, said in a statement. That is below the $20 billion in funding the two had recently discussed, said in an interview with published on Tuesday.

SoftBank cut the size of the investment after his company's stock tumbled in last month's global stock market turmoil, Neumann told

WeWork on Tuesday also announced plans to operate under a new name, The We Company, which will operate separate business units that lease commercial office space, rent out residences and run schools.

The initial plan was to invest $10 billion in SoftBank money to fund WeWork's growth plans and use another $10 billion to buy out employees and other existing investors, according to a person familiar with the matter. That proposal would have given SoftBank majority control of WeWork.

Reducing the investment leaves WeWork with $1 billion to buy shares from existing investors and means Softbank will not gain majority control, said the person, who was not authorized to discuss the negotiations between the two firms.

The newly promised funds will not include any money from SoftBank's Vision Fund, whose biggest investor is Saudi Arabia, WeWork said.

SoftBank used some money to make its early investments in WeWork. But recent investments have come solely from due to political tensions following the death of and some Fund investors raising concerns about investing too heavily in WeWork, the person said.

SoftBank has invested a total of around $10.4 billion in WeWork so far - $4.4 billion in 2017 and $6 billion in 2018 and 2019.

In the first three quarters of 2018, WeWork posted a net loss of about $1.22 billion on revenue of $1.25 billion.

Demand for flexible office space has steadily grown over the past decade, rising to about 11 percent of all leasing in Manhattan last year from about 3 percent several years ago, according to brokerage .

First Published: Wed, January 09 2019. 02:26 IST
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