Daily Management Review

Backer SoftBank Pushes The We Company To Postpone Its IPO: Financial Times


Backer SoftBank Pushes The We Company To Postpone Its IPO: Financial Times
The primary supporter and investor of United States based company We Company, Japan’s SoftBank, is pushing the US company to postpone the planned initial public offering (IPO) for the time being which has added on to the pressure that We Company, which is the owner of workplace sharing firm WeWork, is already facing according to a report published in the Financial Times.
The not so warm response that had been given by public market investors to We Company has promoted this push from SoftBank, claimed the Financial Times report that quoted sources familiar with the company and its main investor.
The company plans to trigger a $6 billion in debt financing from the very bankers designing the IPO and the company need to raise at least $3 billion from the IPO. The company’s plan to launch a worldwide expansion of its business would be delivered a severe blow if it is unable to cross the $3 billion mark from the IPO. According to analysts, the expansion plans are crucial to the financial success of the company and it is this growth and success potential that the company is selling to the investors in the public market.
There were reports over the weekend about We Company contemplating reducing its target amount it plans to raise from its IPO at below than the $20 billion figure which the company had previously targeted.
The We Company was valued at over $47 billion when during its last funding round and if the valuation of the company is constantly reduced, it could create a self-fulfilling prophecy which would bring down the share price of the company even further if the it decides to go ahead with the IPO. 
There were investors who viewed the company doubtfully because of the more egregious financial arrangements issued by the company – which is it is now considering to change and has even taken steps to do the same. The company also added a woman to the its board of directors after there was severe criticism of the company’s board being comprised of male representatives only. The company had also reversed an agreement worth almost $6 million that it has struck with its chief executive Adam Neumann against the later allowing the use of the brand “We”.
However, despite these steps, analysts say that the investors are very confident about the long term prospects of the company. For one, despite the restructuring within the company, Neumann still holds say and hold over the company and the company is also piling up losses in its primary business of sub-leasing long term commercial rental space to short term tenants.