SoftBank weighs up purchase of majority stake in WeWork

10 Oct 2018

WeWork headquarters in Chelsea, New York. Image: WeWork

Japanese giant SoftBank is in talks to purchase a majority stake in US co-working firm WeWork.

SoftBank is apparently in talks to invest $15bn to $20bn in WeWork, giving it a majority stake in the company, according to a Wall Street Journal report. The paper says the discussions are ongoing and there is no guarantee of a deal.

Last August, SoftBank’s Vision Fund made a $4.4bn investment in the co-working company, providing it with a 20pc stake. The Vision Fund is valued at approximately $93bn and is backed by SoftBank’s own capital, as well as Saudi Arabia and Abu Dhabi wealth funds. The Japanese company also holds two board seats at WeWork.

The deal, if it goes ahead, would mark a change for SoftBank, which has traditionally made minority stake purchases in late-stage start-ups.

Some Silicon Valley investors have been sceptical about WeWork due to its outlook being closely tied to the health of the property market. The start-up’s financial results in August this year showed its second-quarter losses grew.

An interest in real estate firms

According to TechCrunch, SoftBank is showing an interest in real estate technology firms. In September, the Vision Fund backed property platform Opendoor with $400m, and it led a $400m funding round for real estate brokerage start-up Compass in the same month.

SoftBank staff use WeWork spaces at the two companies’ joint space in Japan, and the tech behemoth is also considering moving its headquarters into WeWork premises. In September, WeWork surpassed JP Morgan as the largest tenant of office space in Manhattan. It is also the largest private tenant of office space in central London, ahead of Google and Amazon.

WeWork was founded by Miguel McKelvey and Adam Neumann in 2010 and has raised close to $5bn in a combination of debt and equity funding to date. It has more than 268,000 members across 287 locations in 23 countries. If the deal with SoftBank goes through, it will make WeWork the second most valuable venture capital-backed firm in the US, behind Uber.

SoftBank is also said to be in talks to launch a second Vision Fund, according to The Telegraph. Masayoshi Son, CEO of SoftBank, said he plans to raise a new fund every two to three years.

Updated, 1.40pm, 10 October 2018: This article was updated to clarify that WeWork was founded in 2010, not 2018.

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects