WeWork delays public offering as investor interest fades

17 September 2019, 11:56 | Updated: 17 September 2019, 13:17

WeWork's much-anticipated initial public offering (IPO) has been postponed until the end of the year.

The shared office provider's listing has come under heavy scrutiny, with investor interest in the Silicon Valley start-up appearing to wane.

The We Company, the firm's parent company, was originally expected to list its shares this month - but on Monday, it confirmed that the flotation is now set to take place later in 2019.

Valued at £37.8bn in January, WeWork may now seek a vastly discounted valuation of £8bn to £9.6bn.

A statement said: "The We Company is looking forward to our upcoming IPO, which we expect to be completed by the end of the year.

"We want to thank all of our employees, members and partners for their ongoing commitment."

The company has become a symbol of Silicon Valley excess in recent months, with questions arising over the company's lack of a path to profitability, and issues surrounding corporate governance.

Some investors have voiced concerns over CEO and co-founder Adam Neumann, who is perceived to have outsized influence over the company.

On Friday, The We Company moved to quell these worries by announcing a raft of changes - limiting Mr Neumann's voting powers and his ability to pick his successor.

The CEO had initially planned to pick a successor with his wife, fellow co-founder Rebekah.

WeWork's business model has also been questioned, with soaring costs and leases that will require it to pay £14.5bn in rent over the next decade, leaving investors unsure as to when it will achieve profitability.

According to reports, The We Company judged on Monday that the IPO would have raised a little more than £1.6bn, falling short of its target of at least £2.4bn.

Last month, The We Company received a £4.8bn credit line from a consortium of banks - including JP Morgan and Bank of America Merrill Lynch - that mandated for the company to list by the end of 2019 and to raise at least £2.4bn.

If the start-up failed to meet this target in its IPO, it would need to secure alternative funding.