SoftBank Slashes WeWork Investment From $16Bn To $2Bn

WeWork’s biggest backer just dropped its next investment to the coworking giant by $14 billion.
  • SoftBank Group has reduced its potential $16 billion investment into WeWork to $2 billion
  • The move came after SoftBank’s backers expressed concern over its free flow of capital to the coworking giant
  • In the future, it might be harder for the coworking giant to raise funds to power its global expansion plans

Less than a month ago, word got out that WeWork and SoftBank’s romance had hit a wall after key investors in SoftBank Group questioned the Japanese conglomerate’s intention to pour $16 billion into the coworking giant.

The romance is not yet over, but it’s going through a rough patch.

The Real Deal reported yesterday that although SoftBank initially planned to invest $16 billion, that number has now shrunk considerably.

“SoftBank has slashed a potential $16 billion investment in WeWork to $2 billion, after the Japanese megafund’s backers expressed concern over its free flow of capital to the flexible office space company.”

Though SoftBank’s Vision Fund was expected to invest the $16 billion and possibly take a majority stake in WeWork, the pushback WeWork received from Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Co. altered those plans. According to The Real Deal, not only has the amount been slashed, it also won’t be coming from SoftBank’s Vision Fund.

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So far, SoftBank’s Vision Fund has committed $8.4 billion to WeWork.

In the future, it might be harder for the coworking giant to raise funds to power its global expansion plans. Doubts from SoftBank key investors isn’t a good sign for WeWork, especially considering SoftBank is, to date, its biggest backer. Furthermore, WeWork’s bond debt is trading sub-par, possibly due to the market’s overall lack of long-term confidence in their success.

WeWork’s valuation, as well as the sustainability of its business model, has been been questioned time and again by industry experts and veterans. A short while ago, a Wall Street Journal opinion piece ranked WeWork as one of the companies most likely to fail in an economic downturn.
Still, there are some that believe the coworking giant will thrive nonetheless. Writing for the New York Times, Andrew Ross Sorkin argues that since the “company holds so many leases in so many cities, it might hold more power than its landlords.”