After a multi-year journey filled with twists and turns, coworking company WeWork will go public as soon as this week.
As the company itself finally breathes a sigh of relief, questions are being raised about whether SoftBank Group will ever recoup its over $17 billion provided to WeWork over the years.
For SoftBank, the chances of turning a profit on its investments seem slim to none. In fact, a lot would need to go right in order for the firm to make money on the startup.
The best case scenario is that WeWork brings in a significant portion of new remote and hybrid workers who need a coworking space closer to their homes.
However, a win for SoftBank may look more like them breaking even according to Alex Snyder, portfolio manager at CenterSquare Investment Management.
It’s unfortunate, given SoftBank essentially saved WeWork when it hit rock bottom after its catastrophic attempt to go public in 2019 led to the disbandment of its C-suite, including vibrant cofounder and former CEO Adam Neumann.
As part of its deal to bail out WeWork, SoftBank gave the company over $5 billion in new financing.
Now, as WeWork finally approaches its public listing via merging with special purpose acquisition company BowX Acquisition Corporation, the company will start trading at around $10 with a $9 billion valuation.
This ended up being relatively good news for SoftBank, as this allowed the firm to buy shares at 1 cent each, gobbling up 130 million shares. When WeWork lists, SoftBank will get another 12 million if the letter of credit is extended to 2023.