WeWork Picks Nasdaq, Mulls Governance Changes To Save IPO

WeWork is planning to list its shares on Nasdaq as it considers leadership changes to stimulate investor interest in advance of its initial public offering, The Wall Street Journal reported on Friday (Sept. 13).

Although the IPO has been eagerly anticipated, questions and concerns over losses have cooled investor interest. We Co. has $6 billion in outstanding loans and needs to raise a minimum of $3 billion in the share offering.

Parent company We Co. is still moving forward with the IPO as planned and has already started promoting shares to investors in advance of trading the week of Sept. 23, sources told the WSJ.

Potential investors are also questioning co-founder and CEO Adam Neumann’s recent sale of millions of dollars of We Co. stock and more than $740 million in loans connected to his shares in the company. Neumann still controls the majority of the company’s voting rights through “special shares.”

Changes to WeWork’s governance aren’t clear, Bloomberg reported on Wednesday, Sept. 10. So far, it has added a woman to its board and had Neumann return $5.9 million of partnership interests. Also at issue is rent money the company loaned to Neumann and his voting rights over major decisions.

WeWork was valued as high as $47 billion during private fundraising rounds but is expected to dip below $15 billion. SoftBank Group, WeWork’s largest investor, is facing the prospect of having to write down the investment because of the lower valuation or pump more cash into the venture to buy some time. SoftBank has invested more than $10 billion into WeWork.

The lower valuation is due to concerns over the viability of the WeWork model. Some analysts say that for the company to be successful, it has to rely on some longer-term liabilities and some short-term revenue. There are also questions about how the company would perform if the economy takes a dive.

The lower valuation will hurt SoftBank because right now it’s looking for capital from investors for a second Vision Fund. SoftBank returns have already been impacted by less than stellar returns for Uber and Slack, which both recently went public.