Wework hits the brakes on London expansion after Softbank rescue deal
Wework’s new owner has put its London expansion plans under review after Softbank stepped in with a massive bailout for the company, it is reported.
The co-working space giant, which scrapped plans for an initial public offering (IPO) this year, has paused 28 possible deals as Softbank seeks to change tack.
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The deals in question range from initial property inspections to advanced talks, sources told Bloomberg.
Now Softbank has hit the pause button it is unclear how many of these offices will now become Wework buildings.
One building whose future is now in question is reportedly 5 Churchill Place, the former home of former investment bank titan Bear Stearns in Canary Wharf.
Wework was in talks to lease one-and-a-half floors of the building, two sources told Bloomberg.
“London has always been a fantastic market for us and we continue to see strong demand here,” a Wework spokesperson said.
“We now have 48 buildings open across the capital and have announced a further 11, including 17 St Helens Place in Canada which we signed this week.”
Wework’s relentless expansion in London and Europe saw losses skyrocket 900 per cent at its internal division in 2018.
Wework International sank to an £80m loss as it poured money into 30 UK locations.
Now, however, parent firm We Company is curbing that pace of expansion as it attempts to bring home a profit to pacify sceptical investors.
It pulled an IPO in September, then dethroned its colourful founder, Adam Neumann, handing control to two co-CEOs.
Neumann stepped down from the board as part of the Softbank deal, which netted him $1.7bn (£1.3bn). He stands accused of gender discrimination and of smoking cannabis in front of a pregnant member of staff.
Read more: Ex-Wework CEO Adam Neumann accused of pregnany discrimination
Fitting out Wework’s plush offices – and the subsequent marketing of them to possible tenants – are major factors behind Wework’s $2.9bn losses.
Under Neumann, the company was losing roughly $2 for every $1 in revenue.