Wework sells control of China arm for $200m in global pullback
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Wework is selling control of its Chinese division to one of its investors, in a deal that further reduces the office space provider’s global presence after the coronavirus pandemic worsened its financial troubles.
Private equity firm Trustbridge Partners will pay the company $200m (£157m) for majority ownership of the unit, as Wework retreats from a highly-competitive market where it has suffered from low occupancy rates.
The sale is an indication of a global retreat by Wework, which has faced a series of fundraising woes since a failed attempt to go public in 2019 after investors grew wary of its high losses, business model and corporate governance.
The botched listing attempt led to the resignation of co-founder and former chief executive Adam Neumann. While Wework has since undergone significant management change, it remains enmeshed in lawsuits over a $3bn tender offer to existing shareholders.
The co-working space provider has been hit hard by the slump in demand for office space caused by the coronavirus pandemic, and has significantly slowed the pace of its expansion.
Last month the company secured a $1.1bn of financing from Softbank, which has already invested billions of dollars in Wework, to help it weather the coronavirus crisis.
Wework’s Chinese business hit a valuation of $5bn during a funding round two years ago, which attracted investment from Softbank and its Vision Fund, as well as Singaporean sovereign wealth fund Temasek.
The division had attracted prominent tenants including Chinese tech giants Alibaba and Tencent.
WeWork said it will maintain a minority stake and “participating interest” in Wework China, which has a presence in 12 Chinese cities, following the deal. It will also receive an annual fee from the unit for use of the WeWork brand.
Michael Jiang of Trustbridge Partners will serve as the unit’s acting chief executive. Concurrent with the deal, the division has received $200 million in funding from existing investors, Wework said.