- IWG, the world’s leading flexible space company, put its IT and tech operations unit, Worka, up for sale last week — with the aim of selling 50% for £800 million.
- Worka is made up of the IWG space app itself, plus the Instant Group, which merged into it in 2022 along with a cash injection of £270 million.
- Today’s market uncertainties mean that there are some superb investment opportunities around.
Sky News announced last Friday that the world’s leading flexible space company, IWG plc, had put its IT and tech operations unit, Worka, up for sale — with the aim of selling 50% for £800 million, making the subsidiary worth £1.6 billion (US$2 Bn), approximately the same as the market cap. of IWG as a whole. With an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of £112 million, the implied value of £1.6bn equates to a 14.3 times EBITDA multiple and a roughly 6 times multiple of sales. While perhaps a little on the high side for today’s market conditions, those multiples are not outrageous for a tech company and at least Worka is a tech business, unlike WeWork.
Worka is made up of the IWG space app itself, plus the Instant Group, which merged into it in 2022 along with a cash injection of £270 million. From the outside, it is difficult to judge the value of Worka. This is not helped by the fact that there are several unrelated businesses with the same name, and the website of the IWG Worka is still under construction, but no doubt those potential buyers that have been invited into the data room will see for themselves.
From the perspective of an external financier, if I was interested in Worka, I would be tempted to do a different kind of deal with Mark Dixon, IWG’s main shareholder: to take an interest in the whole company — which is arguably undervalued at the current share price — rather than pay top dollar for Worka, even though the Instant Group is a very interesting asset.
Better still, investors could eschew all the big companies in the coworking space and build a portfolio of high-performing assets managed by top-rated smaller operators. Today’s market uncertainties mean that there are some superb opportunities around.
