By Joshua Franklin and Anirban Sen
(Reuters) – We Company, owner of WeWork, has delayed its initial public offering (IPO), setting aside preparations to launch it this month following a weak investor response to its plans. The US shared-office startup was preparing for an investor road show for its IPO this week before making the last-minute decision on Monday to quit, sources familiar with the matter said. The company is under pressure to proceed with stock listing to secure funding for its operations. In the run-up to the launch of its IPO, We Company faced concerns about its corporate governance standards as well as the sustainability of its business model, which is based on a mix of long-term liabilities and short-term revenue, and how this model would withstand an economic crisis. Reuters reported last week that We Company could seek a valuation in its IPO of between $ 10 billion and $ 12 billion, a significant discount compared to the $ 47 billion valuation reached in January. "We Company is looking forward to our upcoming IPO, which we hope to complete by the end of the year. We want to thank all our employees, members and partners for their continued commitment," the company said in a short statement. If We Company had pursued the IPO with such a low valuation, that would represent a big turnaround in the growth of the venture capital industry in the last decade, leading to the emergence of startups such as Uber Technologies, Snap and Airbnb. That would mean We Company would be valued at under $ 12.8 billion in equity it has raised since it was founded in 2010, according to data provider Crunchbase. And that would be a blow to its biggest sponsor, Japan's SoftBank Group Corp., as it is trying to raise $ 108 billion from investors for its second Vision Fund. SoftBank was discussing supporting the IPO by buying shares between $ 750 million and $ 1 billion, sources said. However, We Company decided on Monday that, even with SoftBank's support, the IPO would have raised just over $ 2 billion, below the target of at least $ 3 billion. That goal is tied to a $ 6 billion credit line that We Company secured to banks last month, which requires it to go public by the end of the year and raise at least $ 3 billion, a company said. from sources. If the New York-based company does not meet this target by the end of the year, it will need to secure alternative financing. The Wall Street Journal reported for the first time about the possible delay of the IPO. The last time SoftBank invested in We Company was in January, valuing the company at $ 47 billion by pumping $ 2 billion in cash. He was pressuring the company to postpone its IPO.
(Additional reporting by Debroop Roy in Bengaluru)