There could be some financial relief coming WeWork’s way after the disaster of a month that the company witnessed recently. According to a report from The Wall Street Journal, The We Co., the parent company formed to take the controversial rental startup to its much anticipated IPO, might see a capital burst from its largest investor Softbank.
There’s a catch however. Softbank is reportedly planning this bailout largely to take control of the company and run it going forward. Nothing to blame there though, considering the massive financial hit the Japanese conglomerate is looking at. Multiple reports have suggested that WeWork’s current valuation has dropped well below the total amount the company has raised so far.
While the entire fiasco has already resulted in company’s founder Adam Neuman loosing his leadership title, Softbank is now looking to further clip wings through this bailout. WSJ reports that the capital infusion plan in place would further remove Neumann from the company’s operations and business.
However, it isn’t just Softbank’s money that We Co. has as a lifeline. Reports from multiple media outlets have already suggested, that the company has a plan in the works to raise billions of debt through a process being managed by JPMorgan Chase & Co.
In a statement issued to TechCrunch, a We Co. spokesperson said, “WeWork has retained a major Wall Street financial institution to arrange a financing. Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week”.
Softbank on its end, has a lot to handle. The company’s ambitious $100 Bn Vision Fund seems to have picked all the wrong companies to invest so far. Be it the IPO debutants Uber and Slack, or WeWork in itself, none of its bets are returning even profits, forget about multiple times ROI (which most investors in the fund have been promised).
Firoz joins The Tech Portal to report on all stuff that relates to developers and their community. He is actively involved in multiple startups, helping them build and develop modern web products.