SoftBank Reins In Plans Of Additional $16B WeWork Investment

SoftBank is — yet again — increasing its stake in New York-based workspace sharing company WeWork, though the investment is significantly smaller than what SoftBank had reportedly been considering.

Reports in The New York Times on Monday (Jan. 7) said SoftBank added $2 billion to its investment in WeWork, three unnamed sources said, valuing the company at $47 billion and topping SoftBank’s total funding in the company at $10.5 billion — $6 billion of which came in the last six months.

“They’re our closest partner, and they’ve been extremely supportive,” said WeWork President Artie Minson of SoftBank in an interview with the publication.

However, the $2 billion addition is far smaller than what SoftBank was reportedly considering. The sources told reporters that SoftBank was exploring a deal that could have topped $16 billion in an additional investment in WeWork, in a bid that would have bought out WeWork’s other backers.

While the sources did not reveal why SoftBank pulled back on those plans, NY Times noted that technology companies are increasingly reluctant to accept investments from Saudi Arabia, where SoftBank’s Vision Fund is based, following the death of journalist Jamal Khashoggi. While a significant portion of SoftBank’s investment in WeWork stems from that Vision Fund, the latest investment comes directly from SoftBank itself.

WeWork said last summer that it had more than 250,000 paying members of its on-demand workspace rental service at the time, with plans to broaden its enterprise operations and lease office space to conglomerates like Salesforce and Amazon. According to reports, though, the company continued to outspend, posting a $723 million loss in the first half of 2017.

Senior Analyst Alex Snyder of real estate investment firm CenterSquare told NY Times that WeWork’s $47 billion valuation “is going to take a significant amount of growth to justify it.”

“They are vastly outspending their cash flow position to sustain their growth,” he continued. “You can do that as long as people are willing to give you the money.”

SoftBank’s own shares in its Japan-based mobile operations declined after its recent initial public offering (IPO), reports noted.