WeWork Eyes SaaS SpaceIQ Acquisition Pre-IPO

Initial public offering (IPO) talks continue for co-working company WeWork as it moves to acquire software startup SpaceIQ, people familiar with the matter told CNBC.

Silicon Valley-based SpaceIQ, which develops management and analytics software for making efficient use of office space, could help WeWork appear more like a technology company as it gears up for its IPO. SpaceIQ has raised about $11.5 million in venture funding.

WeWork is now worth $47 billion as it moves to go public in September through its parent, The We Company. It could potentially be the second-biggest IPO of 2019. (Uber currently holds the top spot with its $8.2 billion IPO earlier this year.) WeWork’s preliminary paperwork was filed in May.

WeWork rebranded to The We Company earlier this year to reflect its expansion beyond the co-working market. The company was last valued at around $36 billion after Japanese technology and telecommunications giant SoftBank invested about $2 billion in the company in January. WeWork lessened its loss to $264 million in the first quarter, while revenue more than doubled to $728.3 million.

The company is also looking for a $2.75 billion credit line in anticipation of the IPO, which is typical of what firms do before going public. WeWork was the recipient of a $650 million revolver in 2014 from JPMorgan that expires in late 2020. Its junk-rated bonds, which were priced in 2018 and are due in 2025, were at $93.50, which is down from $99.63 earlier in May.

While WeWork doesn’t own much in the way of property, it has a valuation that is more than double that of Boston Properties, which is one of the biggest owners of high-quality office buildings in the country. WeWork’s losses are also ballooning, but it has secured significant funding from investors and has aggressive plans for global expansion.