As WeWork Spirals, Competitor IWG Has Gained 60% In Value

Photo credit: Courtesy of IWG
The Iwg Office In One Kingdom Street, London.

The We Company's sudden fall from grace left its larger, less flashy international competitor smelling like roses.

International Workplace Group, which is publicly traded on the London Stock Exchange, has gained 60% in value over the past 12 months, The New York Times reports.

With a global footprint about 10 times the size of WeWork's, IWG's revenue was about the same through the first half of this year. But IWG, which operates multiple brands of coworking spaces like Regus and Spaces, reported an operating budget of $63M over that period, while WeWork reported losses of $1.37B, the Times reports.

With SoftBank Group inflating its private valuation to $47B, The We Company opened its books in anticipation of an initial public offering in August. What its prospectus revealed was a company burning through money at a prodigious rate and a complex corporate culture, which scuttled its public market debut.

IWG CEO Mark Dixon dismissed any differences between his company's operations and those of WeWork as superficial, but claimed to have been rooting for his competitor's valuation to be supported by the public market. That would likely have allowed IWG to draft behind The We Company to a higher valuation with minimal effort, Dixon said in an interview on CNBC's Squawk Box on Tuesday.

"It was hard to understand how that valuation could be achieved," Dixon said. "It is the same business [as ours] in every sense."

Mark Dixon
Photo credit: Courtesy of IWG
IWG CEO Mark Dixon

Dixon is intimately familiar with the type of strain WeWork is under, thanks to Regus' bankruptcy in 2003. When the dot-com bubble burst, it left Regus in the lurch after a period of rapid expansion. Ever since the company re-emerged as IWG, Dixon has been "super cautious" with its growth strategies, Dixon told the Times.

One of its recently adopted methods for expanding without straining its balance sheet has been to franchise locations to operate under its brand, as is common with chain restaurants and hotels.

IWG also uses a partnership model with the owners of buildings it occupies, as opposed to WeWork's practice of signing long-term leases, limiting both its upside and downside, the Times reports. Regus' and Spaces' build-outs tend to be less costly than the design-focused We Company, further lowering the risk profile for office space owners.

Dixon said he recognizes the opportunity IWG has to capitalize on a market that has soured on WeWork, but not coworking as a whole. The company is reportedly considering spinning off its U.S. business for a separate IPO on the New York Stock Exchange. IWG's market capitalization on the London exchange was $3.54B at the close of trading Wednesday.

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