Investing.com – One of the year’s most high-profile IPOs appears to be in trouble, adding to a litany of woes for much-hyped startups that have struggled with the extra scrutiny of public markets
The WeCompany, the parent company of share office rentals group WeWork (NYSE:), is considering slashing its valuation by more than half ahead of a public offering that was widely expected to take place this month, according to The Wall Street Journal.
It now expects a valuation of around $20 billion, less than half the $47 billion it notched at its last round of private funding, the WSJ said, citing people familiar with the matter. It added that the company hasn’t ruled out pushing back the IPO to next year, and last week discussed a further capital injection from core backer Softbank that would allow it to do just that.
The news come at a time when investors in some of the year’s biggest IPOs are already well under water, an experience that will hardly encourage them to bet on another loss-making unicorn. Uber (NYSE:) has already lost 27% of its market value since listing in May and hit a new all-time low on Monday, while rival ride-sharing company Lyft (NASDAQ:) has lost 35% since it went public.
The WeCompany is reportedly looking to raise around $3 billion from the sale, and another $6 billion in debt finance loosely tied to the IPO. According to Bloomberg, the availability of the credit is dependent on the IPO raising at least $3 billion, and on the company meeting various performance targets thereafter.
The WeCompany’s IPO prospectus had been poorly received last month, with many criticizing it as trying to mask a questionable business model with obscure accounting metrics and Silicon Valley buzzwords. The prospectus said the company, which lost $1.9 billion last year, had a mission to “raise the world’s consciousness.”
Potential investors also criticized what they saw as an over-complex legal structure and the governance risks arising from the fact that CEO and founder Adam Neumann will keep near-complete control over the company even after the offering.
The WSJ reported that Neumann flew to Tokyo last week to discuss various options with Softbank CEO Masayoshi Son, who has already committed billions of dollars to the company. The options included Son’s Softbank acting as an anchor investor in the IPO.
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