IWG has revealed plans to raise a £315 million war chest to fund its expansion and pursue acquisitions of rivals that have been impacted by the pandemic.
This shows that the company is confident in businesses seeking short-term, flexible office arrangements that want to expand their footprint to meet physical distancing guidelines.
The equity would allow IWG to “rescue” offices and brands that have been forced to close and taken a major hit due to the virus.
CEO Mark Dixon, who owns a 28.5% stake in the company, is personally putting £90 million into the equity raise.
IWG itself has experienced a big hit recently, with shares in the company falling 41% since the beginning of the year. However, the company’s net debt of £320 million is nearly 40% lower than it was 12 months ago.
“It’s no secret that their business model leaves them exposed,” said Calum Battersby, an analyst at Berenberg. “But net debt hasn’t really moved since the year end, suggesting that most of their customers have been able to pay or [IWG] has offset that elsewhere.”
In the meantime, the company has halted opening new locations, furloughed staff and scrapped its dividend. Additionally, the company’s board has taken a 50% pay cut and made deals for rent deferrals with its landlords. These measures haved saved the firm nearly £150 million.