Office company setback
WeWork pulls $15bn IPO as Edinburgh offices open
WeWork has opened offices in George Street, Edinburgh
WeWork, the office leasing company, has formally withdrawn its planned public listing just a week after its founder and CEO left the business.
The decision, which has been expected, leaves the New York firm needing to resolve a growing cash problem as its new bosses prepare extensive cuts to stem its massive losses.
WeWork has just opened new offices in Edinburgh, its third location in the UK, as parent group the We Company said it will focus on its core business.
New co-chief executives Artie Minson and Sebastian Gunningham, who replaced Adam Neumann, said in a statement: “We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong.”
WeWork is the biggest tenant in New York City (tenants include The Guardian newspaper) and has made its name leasing, renovating and subleasing office space as it rapidly expanded into more than 500 companies across the world.
It has opened offices in George Street, Edinburgh which have the capacity for 800 workers.
It was once valued at $104 billion. Since filing regulatory documents to go public on 14 August 14, however, concerns have arisen over its losses and corporate governance which have led to doubts over its sky-high valuation.
The postponed IPO would have given the business a valuation of $15bn, still regarded as excessive for a company with a yearly loss amounting to nearly $5,200 per customer, according to one report.
It has £2.5bn cash pile and is expecting $1.5 billion arrive next year from its biggest investor, the Japanese firm SoftBank. Despite the cash injection, analysts believe it could run out of money some time after the first quarter of 2020.
The co-CEOs insist the IPO will be back on the agenda, stating they “have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future”.
They are reportedly planning thousands of job cuts and other cost-saving measures. As many as 5,000 employees, one-third of the company’s workers, could lose their jobs.
Mr Neumann was axed after the Wall Street Journal revealed he had taken $700m out of the company before the IPO.