WeWork Cos. is aiming to go public in September, earlier than many investors had expected, after boosting a loan facility the office-space manager hopes will pave the way for the listing.
WeWork, which filed its IPO paperwork confidentially late last year, is expected to publicly disclose it in August, setting up the company for a stock-market debut the following month, according to people familiar with the matter. That timing, which could still slip, is ahead of what many investors and advisers who had been seeking roles on the deal had previously expected. WeWork hasn’t publicly said when it expects to launch the IPO.
The company is meeting with Wall Street banks this week about an asset-backed loan that could be finalized in the coming weeks and is expected to raise $5 billion to $6 billion, or about $2 billion more than it had originally sought, the people said. The funds will lessen the amount WeWork needs to raise in the IPO, which could increase the probability of success for a company with ballooning losses.
The IPO would still likely raise several billion dollars, people familiar with the matter have said, potentially making it the second-biggest new issue this year after the May listing of
which raised roughly $8 billion. Big IPOs have come at a torrid pace lately, setting up 2019 to potentially be the best year ever as measured by money raised.
Indeed, one reason for the September launch target is executives at WeWork are worried that the good times won’t last, with the U.S. stock market trading near records.
It is unclear where public investors might value WeWork, which rebranded itself earlier this year as the We Company, and whether it could garner a valuation anywhere near its latest private round of funding. It was last valued at $47 billion when it raised capital from
earlier this year. However, at that time, SoftBank also bought shares from WeWork employees and investors at a valuation of around $23 billion, giving the company a blended valuation of around $36 billion.
There is still more work to be done before WeWork can launch its IPO. The company has yet to formally meet with bank analysts, though it has set aside a day later this month to do so. It also has yet to finalize underwriter roles.
Once it does so, WeWork will have to address questions about its yawning losses; the nine-year-old New York company’s $1.9 billion loss last year outstripped the $1.8 billion of revenue it generated and helps explain its ravenous appetite for cash.
The debt deal, first reported by The Wall Street Journal this month, is designed to help WeWork showcase the value of its leases and the cash they generate. It also is expected to show that profitability is something within the company’s control because many of its individual properties are profitable and much of its losses come from growth initiatives.
Some investors and potential advisers have also expressed concerns that WeWork co-founder Adam Neumann has reaped hundreds of millions of dollars from his holdings in the company—an unusually large sum given that startup founders typically wait for an IPO to cash in on their holdings. Mr. Neumann, who is chief executive of the company, remains its single largest shareholder.
The IPO will be the latest test of investor appetite for money-losing companies that are highly valued in the private market. While IPO demand in the U.S. has been strong this year, there have been some high-profile stumbles.
Inc. surprised investors and bankers when its shares tumbled roughly 20% in their first few weeks of trading this spring. Following Lyft’s disappointing debut, its rival Uber trimmed its target valuation ahead of its IPO. Both Lyft and Uber currently trade below their IPO prices.
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