WeWork IPO valuation likely below $20 bln, clouding SoftBank's vision

WeWork considers dropping valuation below $20 billion Dow Jones

Softbank made a follow-up investment in We Company, one of its biggest tech bets, at a $47 billion valuation earlier this year-a number widely treated with skepticism by analysts.

WeWork's planned listing follows weak initial trading at other startups including Uber Technologies Inc UBER.N and Slack Technologies Inc WORK.N , both backed by SoftBank.

A sharp cut to WeWork's valuation would be a blow to SoftBank as at a time when it is seeking funds from investors for a second Vision Fund, for which it says $108 billion in pledges have been secured.

SoftBank Group Corp and its affiliates hold about 29% of WeWork stock, Bloomberg reported last week.

The company intends to raise up to $4 billion through its IPO, while securing an additional $6 billion in debt, provided its public offering generates at least $3 billion, according to sources familiar with the matter.

Son and long-time lieutenant and group Vice Chairman Ron Fisher were in favor of the IPO until last week, even as others inside the group were pushing for a delay, one source said. However, last week there were rumors that WeWork thought it was worth only $ 20 billion.

The pressure follows signs that outside investors do not value the much-hyped firm as highly as SoftBank did when it invested past year.

SoftBank, WeWork's largest shareholder, is urging the office-space-subleasing firm to pause its embattled IPO course of after a cold reception from would-be traders, the Financial Times' Eric Platt and James Fontanella-Khan reported. As per sources, WeWork is soon going to consider the viewpoints of investors and discuss possible amendments that can ensure a successful IPO. The 7.875% note due in May 2025 was down 2.5 cents on the dollar and the yield surged by 55 basis points to the highest since mid-August.

Tech conglomerate SoftBank has burned through much of the $100 billion raised by its first Vision Fund in just two years, recording big paper gains on internal revaluations of its tech investments.

A low valuation would hit SoftBank Group especially hard. At the end of June the fund recorded the value of $71 billion invested in 83 investments as having grown by $20 billion. The Financial Times said SoftBank was anxious that a low price would affect its other fundraising projects.



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