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Sun 27 Aug 2017 08:43 AM

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WeWork wins $4.4 billion investment from Saudi-backed fund

Investment from SoftBank will fund an aggressive global expansion plan for the co-working startup

WeWork wins $4.4 billion investment from Saudi-backed fund
A man enter the doors of the WeWork cooperative coworking space in Washington DC In a large warehouse type office in Washington software coders work on apps while angel investors and mentors help budding entrepreneurs figure out strategy for their startups in what is being dubbed Silicon Valley on the Potomac. Photo: MANDEL NGANAFPGetty Images

WeWork Cos agreed to a $4.4 billion investment from SoftBank Group Corp. and its Vision Fund, part of an aggressive global expansion plan for the co-working startup.

New York-based WeWork, which rents office space to workers, and Japan’s SoftBank have been formalizing an alliance this summer that includes a $500 million project in China and a joint venture in Japan. Part of the funds will also go toward letting some shareholders of the privately held startup cash out.

SoftBank is sitting on a massive cash pile thanks to a nearly $100 billion technology fund it started with the Saudi Arabian government. The Japanese investment firm has been ramping up deals with tech companies, rankling venture capitalists in the process. VCs worry SoftBank could drive up valuations and create a frothy market.

WeWork’s valuation increased to about $20 billion after the latest investments from SoftBank, a person familiar with the matter has said. That made it among the world’s five most-valuable tech startups. Parts of the deal had been previously disclosed.

The investment from SoftBank is broken into several parts. It will spend $3 billion to buy shares from WeWork directly, as well as from current shareholders who want to sell. WeWork declined to provide terms for the transactions. The last time a significant group of employees and early backers were able to sell stock was in 2015.

The structure of that part of the transaction mirrors another deal SoftBank has been discussing with Uber Technologies Inc. SoftBank and three other investors are looking to spend as much as $12 billion on buying stock from the embattled ride-hailing giant and its shareholders.

For WeWork, SoftBank is investing an additional $1.4 billion in three Asia-focused subsidiaries in China, Japan and the Pacific region, which includes Southeast Asia and South Korea. The companies are hoping to quickly gain a foothold in those regions before homegrown competitors can take over, as Didi Chuxing did to Uber in China. WeWork recently took steps to explore legal action over trademarks against China rival UrWork.

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