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WeWork's Long-Anticipated IPO Could Happen In September

Coworking giant WeWork is reportedly angling for an initial public offering in September, which would be sooner than the market expected when the company first disclosed plans to go public this year.

WeWork's parent, The We Company, has already filed IPO paperwork with the Securities and Exchange Commission, though the filing's contents are still confidential.

WeWork's offices at 20 West Kinzie, Chicago
An interior of a WeWork office.

A September IPO apparently hinges on WeWork finalizing an asset-backed loan that would raise as much as $6B. That would pave the way for a public release of the IPO paperwork in August, followed by the IPO itself the next month, the Wall Street Journal reports, citing people familiar with the matter.

Earlier this month, Reuters reported that WeWork was trying to raise as much as $4B, but Bloomberg reported Tuesday the company's target is a $3.5B raise. The funds raised by such a debt offering, which would be separate from an IPO, could grow to as much as $10B in a few years. WeWork has been in talks with JP Morgan and Goldman Sachs about the debt offering.

Whatever the final total, a multibillion-dollar loan or credit facility ahead of any IPO would have the effect of lessening the amount WeWork would need to raise by selling stock. Effectively, the company is hedging its bets against a disappointing IPO, since investors might cast a skeptical eye on a company with a current valuation of $47B, but which also has lost billions in recent years.

Though not a public company yet, WeWork disclosed in March that it lost $1.9B in 2018 on revenue of $1.8B. In 2017, the company lost $933M on revenue of $886M.

At the same time, occupancy at WeWork's shared office space worldwide reached 90% in 2018, the company said. Total membership ballooned along with it, by 116% to reach 401,000.

The $47B valuation was a result of the latest investment in WeWork from SoftBank's Vision Fund. The Japanese conglomerate made a $6B equity investment in the coworking company late last year, and would presumably stand to do well from a successful IPO.

So would JPMorgan Chase, the company that WeWork passed as New York's largest office tenant, which also owns a stake. Harvard Management Co., the entity in charge of the university's endowment, is another major WeWork investor.

WeWork founder and CEO Adam Neumann has reportedly cashed out more than $700M from his stake in the company ahead of any IPO, through a mix of stock sales and loans secured by his equity in the company. That is an unusual approach, since founders of major tech companies usually cash out after IPOs, TechCrunch reports.

A successful IPO is no sure thing for WeWork. So far this year, large IPOs have been plentiful, and some have underperformed. Uber and Lyft in particular saw tepid investor interest, and their shares are generally trading less than  what they listed as their target price for their IPOs.