Earlier in August, WeWork had made an enthusiastic filing of draft papers for IPO, which, however, got postponed following the response of its investors. The situation has become much worse ever since WeWork considered to slash down its IPO valuation by more than half as a result of massive operating losses and skepticism over its governance & strategies and now, CEO Adam Neumann is on the verge of being asked to step down.
Adam Neumann’s exit
According to reports, the directors of WeWork have been planning to meet to discuss Neumann’s departure as a CEO which has also been supported by SoftBank Group’s Masayoshi Son, WeWork’s largest investor. However, reports say that not everyone is against the CEO. Some members of WeWork board that aren’t officially linked with SoftBank are in support of Neumann to retain his post.
WeWork’s initial public offering plans were pushed to be postponed by Softbank. The CEO flew to Tokyo to meet SoftBank’s CEO, Masayoshi Son, to discuss ideas. Son’s move against Neumann has been thought of as an effort to prevent the company from going public. It might serve as a better plan for SoftBank as it would prevent a markdown for SoftBank, that last invested in WeWork valuing the firm at $47 billion earlier this year.
The company has had difficulty getting a valuation of over $20 billion with potential public investors. WeWork’s IPO plans have already brought a massive wave of criticism for the way it clouded the important details about the economics of the business. To be specific, Neumann owns various commercial properties that he had leased to WeWork, and he has sold a significant amount of his equity ahead of public stock offering.
Coworking industry in India
Launched in September 2017, WeWork India as a brand franchisee is controlled by Buildcon LLP, owned by Jitu Virwani and son Karan Virwani- the real estate billionaires. Reports said that WeWork was finally in talks to buy around 70% of WeWork India at a valuation of approximately $2.75 billion.
The company has been dealing with increasing competition from established competitors like 91springboard, Awfis, and OYO’s Workspaces and Innov8 coworking properties. WeWork India has grown to have 25,000 members in 21 locations in cities like Bengaluru, Delhi, and Mumbai within 18 months.
India’s unit is projected to grow to 90,000 seats by March 2020. The firm also plans expansion projects across Chennai, Hyderabad, and Pune by the end of 2019.