Is IWG Looking To Sell Spaces?

Published on January 14, 2019 - By Cecilia Amador de San José

• IWG, the parent company of Regus, is looking to sell or recapitalize its coworking arm Spaces.
• The group reportedly aims to “lure a buyer that wants to take on WeWork”.
• Spaces currently operates 180 locations and plans to grow to over 400 in the course of 2019.

International Workplace Group (IWG), the parent company of Regus and Spaces, is evidently looking to sell or recapitalize its coworking arm, Bloomberg first reported.

According to Bloomberg sources, IWG “has hired an adviser to sell its Spaces unit in an attempt to lure a buyer that wants to take on WeWork Cos.” IWG reportedly brought in Eastdil Secured LLC to help them win over potential buyers.

Last year, IWG received several takeover offers from different private equity groups, which all fell through. IWG believes that Spaces will be more highly valued if it is recapitalized as a standalone unit. IWG is hoping to sell part of Spaces or recapitalize it; selling it entirely would create an uncontrollable competitor to Regus and it would probably reduce IWG’s stock value.

Suggested reading: Private Equity Groups Approach IWG with Takeover Offer

IWG Ends Takeover Talks with Private Equity Groups

Spaces rival, WeWork, is currently valued at $47 billion after SoftBank Group’s recent $2 billion investment. WeWork currently operates 547 locations across 96 cities. International Workplace Group is valued around £2.3 billion. Spaces operates 180 locations and is hoping to grow to over 400 in the course of 2019. If Spaces is planning to grow that much this year, then it means that its pace of growth is equal to or greater than that of WeWork.

Both companies could be on par with each other in terms of number of operating locations. The main difference is that WeWork continues to report losses to this day, while Spaces is reporting profits.

By selling part of Spaces, IWG is trying to have the market recognize that it can compete against WeWork and also, hopefully, increase its valuation. IWG takeover talks last year with private equity investors fell through because none of the groups were willing to pay as much as IWG wanted.
The news comes shortly after SoftBank Group slashed WeWork’s investment from $16 billion to $2 billion, which prompted the coworking giant to consider an IPO in the near future. Spaces might prove to be a worthy opponent to WeWork, especially considering WeWork’s largest financial backer has gone soft on it. Buyers interested in WeWork might find the Spaces option more attractive given that the latter is profitable.