Softbank urges WeWork to shelve IPO over valuation worries:The Asahi Shimbun

WeWork's IPO plan looks increasingly troubled

WeWork's IPO plan looks increasingly troubled

The newspaper's website said that, despite plans to begin a roadshow to market the shares to new investors as early as Monday, We Company and its underwriters are planning to hold meetings this week among themselves and with investors to figure out what changes may be needed to help garner enough demand for an IPO, according to people familiar with the matter.

The company's business model has been criticized as its losses increased by 25% to $905 million during the first half of this year, even though WeWork's revenue doubled to more than $1.5 billion for the same period.

SoftBank and its Saudi-backed Vision Fund have invested more than $US10 billion in WeWork.

Putting the IPO of We Company on hold would disrupt that schedule at a time when Softbank is seeking funds from investors for a second Vision Fund.

Early this year, Goldman Sachs Group Inc pitched WeWork as a US$65 billion business.

Returns for SoftBank first Vision Fund have already been hit by lackluster listings of Uber and Slack. The Financial Times said SoftBank was anxious that a low price would affect its other fundraising projects. It chalked up US$690 million in losses in just the first six months of 2019, bringing its total losses to nearly US$3 billion in the past three years, filing from WeWork's preliminary prospectus showed.

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While long-time Son lieutenant and group Vice Chairman Ron Fisher is pushing for the IPO to go ahead, others at SoftBank are pushing for a delay, one source said.

Other sources stressed the situation was still in flux. As per sources, WeWork is soon going to consider the viewpoints of investors and discuss possible amendments that can ensure a successful IPO.

The pressure follows signs that outside investors do not value the much-hyped firm as highly as SoftBank did when it invested past year. "(WeWork) will have to listen to them", said Lane, who values the office space-sharing firm at $23 billion.

A lower valuation would be a blow to SoftBank, forcing it to write-down its investment.

While SoftBank and its Vision Fund emphasize their long-term investing credentials, founder and CEO Son has set out an ambitious IPO pipeline for tech investments spanning ride-hailing, fintech and health startups.

If a tech company shelves an IPO due to a lower valuation than expected, investors are generally expected to take that fall into account when appraising their stakes.

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