UK flexible office provider BE Offices could be sold for as much as £200M or recapitalised in one of the largest corporate transactions in the sector this cycle.

The company has appointed Rothschild to explore its options, according to The Times.

“We can confirm that Rothschild has been appointed to advise on a range of financing options to raise capital for the business to allow it to accelerate its growth,” BE Offices Non-Executive Director Alan Jacobs told the paper.

BE manages 20 workspaces across the UK totalling more than 800K SF. It operates four brands, including Headspace and Bespoke.

The company owns the freehold of five properties valued at around £150M, and is forecast to produce revenue of £40M this year.

It was set up by David Saul and Simon Rusk in 1994, and the duo still own two-thirds of the equity.

In an interview with Bisnow last year, BE Managing Director Jonathan Weinbrenn said the sector could see consolidation, with newer operators going out of business because of an oversupplied market. He picked out Manchester as an example where supply has spiked very quickly.

“There is only so much space you can offer, and the big corporate landlords are now offering flexible space too, all of which is good for customers but we need to monitor supply and if you get to the stage where people are leafletting on the street to drum up coworking business, that is a sign,” he said.

“I also suspect the high occupancy figures that are claimed, because it is no secret that there is massive discounting going on with occupiers being offered office deals they would be mad to turn down.”

Any sale or new investment would be the third-largest UK flexible office transaction this cycle. In 2017 Blackstone bought a majority stake in The Office Group in a deal that valued the company at £500M, and in 2018 family office Celvam Management bought London Executive Offices for £475M.

Elsewhere in the flexible office world, the largest transaction the sector is ever likely to see moved a step closer this week. According to Reuters, WeWork has secured a commitment from around 10 investment banks to lend it as much as $6B ahead of an initial public offering that could happen as early as next month. The debt makes the IPO of WeWork, valued at around $45B in the private market, more likely to happen.

The one that got away in terms of corporate activity in the flexible office space is IWG. The company walked away from takeover offers from Brookfield and a host of other private equity firms last year. In results for the six months to 30 June announced today it revealed a pretax profit of £53M, down slightly on the same period last year.

It also announced a £100M share buyback and an increased dividend, and that it would be moving toward a franchise model rather than taking new leases on space.