|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||19.72 - 19.90|
|52 Week Range||15.54 - 28.04|
|Beta (3Y Monthly)||2.06|
|PE Ratio (TTM)||2.77|
|Forward Dividend & Yield||0.10 (0.52%)|
|1y Target Est||N/A|
(Bloomberg) -- SoftBank Group Corp. is in discussions to provide WeWork with roughly $5 billion of rescue financing in an effort to salvage one of the Japanese conglomerate’s biggest investments.The funds will come directly from SoftBank, rather than its Vision Fund, according to a person familiar with the matter who asked not to be named because the talks are private. SoftBank, which already owns about one-third of WeWork, would not amass a majority of voting rights, though its stake would increase, the person said. Part of the package may include non-voting preferred stock.News of the financing talks sent WeWork’s bonds to their biggest gain on record Wednesday. The jump of more than 8 cents on the dollar erased a record plunge a day earlier.WeWork, reeling in the past few weeks since parent We Co. scrapped its initial public offering, and in danger of running out of cash as early as next month, has been pursuing a pair of rescue plans to shore up its finances -- one from SoftBank, its largest shareholder, and another from JPMorgan Chase & Co. that would include a $5 billion debt package.New York-based WeWork had been headed toward one of the year’s most hotly anticipated IPOs last month before prospective investors balked at certain financial metrics and flawed governance, turning the company into a cautionary tale of private market exuberance and costing the top executive his job. The fast-growing, money-losing startup had been counting on a stock listing -- and a $6 billion loan contingent on a successful IPO -- to meet its cash needs.Billionaire Masayoshi Son, who controls investment powerhouse SoftBank, was instrumental in ousting WeWork’s controversial co-founder Adam Neumann, but is convinced the once high-flying startup can be turned around, a person familiar with the company’s thinking said recently. SoftBank has already plowed more than $10 billion into WeWork and holds one seat on the company’s seven-member board. It has been in advanced talks to acquire more shares at a significantly lower valuation than the $47 billion WeWork sported in January, two people familiar with those discussions said last week. The Japanese company had agreed to contribute at least another $1.5 billion to WeWork next April, according to the startup’s now-withdrawn prospectus for its IPO.JPMorgan’s package, which has been the company’s preferred option, would be one of the riskiest junk-debt offerings in recent years. The plan has been been met with skepticism from investors, who are concerned about the company’s ability to service the debt.Representatives for WeWork and SoftBank declined to comment on SoftBank’s proposal. Japan’s Nikkei reported details earlier Wednesday.Son is facing a reckoning after repositioning SoftBank from a telecom operator into an investment conglomerate with stakes in scores of startups around the world. The success or failure of WeWork will likely to be read as a statement on the overall standing of SoftBank, the judgment of its executives and its ability to raise cash for future ventures. But Son has made clear, in a recent interview with Nikkei Business magazine, how unhappy he is with how far short his accomplishments have fallen of his goals. SoftBank also put almost $8 billion into Uber Technologies Inc., whose shares have declined about 30% since its IPO earlier this year. Still, Son said he is convinced that WeWork and Uber will be substantially profitable in 10 years.But first, SoftBank is looking at potential damage in the billions of dollars. Analysts at Sanford C. Bernstein & Co. estimate that the Vision Fund, SoftBank’s main investment vehicle, will have to write down $5.93 billion, with another $1.24 billion drop for the part of WeWork owned by SoftBank Group.(Updates with background on SoftBank from sixth paragraph.)\--With assistance from Katherine Doherty and Sarah McBride.To contact the reporter on this story: Gillian Tan in New York at email@example.comTo contact the editors responsible for this story: Craig Giammona at firstname.lastname@example.org, Michael J. Moore, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Bankers who two months ago were fighting for a piece of WeWork’s highly anticipated share sale are now scrambling to just keep the company alive.WeWork and its backers are furiously trying to line up two rescue plans before it runs out of cash as early as next month: one by SoftBank Group, the company’s largest shareholder, and another by JPMorgan Chase & Co., which won WeWork’s IPO mandate but ultimately didn’t pocket a fee as the plan collapsed and cut off WeWork’s access to new cash.JPMorgan is sharing its proposal -- an unusually risky $5 billion debt package that is WeWork’s preferred option -- with about 100 investors, according to a person with knowledge of the discussion. Several have expressed skepticism about WeWork’s ability to service the debt, and news of the proposal’s eye-popping terms sent the company’s existing bonds reeling to a new low on Tuesday.At the same time, SoftBank is trying to pull together a backup option. The Japanese investment powerhouse would inject capital into WeWork and take a controlling stake, a move the company’s management hopes to avoid. To help it craft a proposal, SoftBank hired advisers at Houlihan Lokey to explore options for easing WeWork’s cash crunch, said people with knowledge of the discussions.Both proposals share one thing: a lot of uncertainty.“WeWork’s credit metrics remain off-the-chart ugly,” Vicki Bryan, chief executive officer of Bond Angle, a high-yield credit research company, said in a note Tuesday.JPMorgan’s plan would raise $5 billion in one of the riskiest junk-debt offerings in recent years that could include $2 billion of pay-in-kind bonds yielding 15%. The bank is casting an unusually wide net for this type of offering, pitching investors ranging from some of the world’s largest asset managers to credit hedge funds with expertise in distressed investing, according to people familiar with the matter.PIK NotesPayment-in-kind notes, known as PIKs in industry parlance, give issuers the option to pay interest on debt with more debt. In buying PIK deals, investors are effectively betting that a cash-strapped company will be able to make good on a ballooning debt obligation when it matures. PIK debt has historically been favored by the likes of struggling energy companies and firms exiting bankruptcy.While terms remain under discussion, the potential WeWork PIK could pay 5% interest in cash and 10% interest in debt that would accumulate and become due at maturity. That means that a $2 billion obligation with a 10% payment-in-kind option would grow to $2.7 billion after three years and $3.2 billion after five.WeWork’s board has hired the investment bank Perella Weinberg Partners LP as it weighs its options. With funds running low, the company expects to cut potentially thousands of jobs from its staff of about 12,500 this month, as it focuses on its core business of renting out office space.Lending to WeWork is so potentially dicey that one junk-bond investor, Diamond Hill Capital Management’s John McClain, said anybody brave enough to do it would “be taking on substantial career risk.”The proposed yield in the new debt package underscores skepticism among debt investors that the company will be able to stem its cash bleed and become profitable anytime soon. It’s a costly option that may reward investors handsomely in the event of an actual turnaround.Skeptical ReactionThe market’s initial reaction wasn’t encouraging. WeWork’s existing notes, $669 million of 7.875% bonds due in 2025, fell the most on record Tuesday morning after Bloomberg reported on the potential terms for a new debt package. The junk bonds dropped to a record low of 79 cents on the dollar to yield 13.4%, according to Trace, before recovering a bit.SoftBank’s advisers at Houlihan are working on cutting liabilities as WeWork mulls the debt package. Other measures for restructuring WeWork’s balance sheet could include renegotiating or terminating some existing leases to reduce WeWork’s indebtedness and cash burn. Future lease payment obligations as of June 30 were $47.2 billion, according to the prospectus for WeWork’s aborted IPO.The new debt could come with a coupon nearly twice that of the junk bonds the company sold less than 18 months ago.“If they are talking about doing a PIK note at a yield of 15%, the existing unsecureds have to reprice,” McClain said.\--With assistance from Katherine Doherty and Michelle F. Davis.To contact the reporters on this story: Claire Boston in New York at email@example.com;Gillian Tan in New York at firstname.lastname@example.org;Liana Baker in New York at email@example.comTo contact the editors responsible for this story: Craig Giammona at firstname.lastname@example.org, Rob UrbanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp. has tapped investment bankers at Houlihan Lokey to explore options for easing WeWork’s cash crunch, according to people with knowledge of the discussions.Houlihan is working on cutting liabilities as WeWork mulls a separate deal that could hand control of the struggling office-sharing company to SoftBank, its biggest shareholder, according to the people. They asked not to be named as the discussions are private.Other measures for restructuring WeWork’s balance sheet could include renegotiating or terminating some existing leases to reduce WeWork’s indebtedness and cash burn, the people said. Bankers are also reviewing WeWork’s financial reporting, accounting practices and projected building valuations, one of the people said.Future lease payment obligations as of June 30 were $47.2 billion, according to the prospectus for WeWork’s aborted initial public offering.WeWork prefers a plan led by JPMorgan Chase & Co. to arrange a $5 billion financing package to a SoftBank-led rescue package, Bloomberg has reported. The board of WeWork’s parent, We Co., is working with investment bank Perella Weinberg Partners LP, Bloomberg reported. Both Perella and Houlihan have extensive practices focused on restructuring debts for troubled companies.Representatives for Tokyo-based SoftBank and Houlihan Lokey declined to comment.WeWork is seeking to shore up its finances after pulling its IPO last month.(Adds additional details in third paragraph.)\--With assistance from Eliza Ronalds-Hannon.To contact the reporters on this story: Gillian Tan in New York at email@example.com;Liana Baker in New York at firstname.lastname@example.org;Nabila Ahmed in New York at email@example.comTo contact the editor responsible for this story: Rick Green at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- WeWork’s calamitous effort to take itself public has raised red flags for other SoftBank-backed real estate startups -- and led an executive at the brokerage Compass to send its employees an eight-point memo highlighting differences between the two firms.Compass, like WeWork, has relied heavily on funding from SoftBank Group Corp.’s Vision Fund. The brokerage has become a major player in high-end markets like Manhattan and San Francisco, though some real estate experts say it is more like a traditional brokerage than a tech-industry disrupter.Unlike WeWork, Compass has no debt and is valued at a revenue multiple comparable to publicly traded real estate technology companies, according Chief Financial Officer Kristen Ankerbrandt.“Over the past few weeks we have seen comparisons being drawn between Compass and WeWork simply because we share a single investor,” Ankerbrandt wrote to employees last week in an email obtained by Bloomberg. “To be clear, our businesses are quite different -- in terms of our business model, capital structure, customers, culture and investments.”Ankerbrandt also boasted of Compass’s deep roster of investors, including Qatar Investment Authority and Dragoneer Investment Group; a 425-member tech team building tools to differentiate Compass from other brokerages; and a frugal leadership team that “books coach tickets and does not fly on private jets.”In December 2017, the Vision Fund agreed to invest $450 million in Compass, touted at the time as the largest real estate technology investment in U.S. history. The Vision Fund also participated in subsequent raises, including a $370 million round announced in July that valued the brokerage at $6.4 billion. At the time, the company said it would use the money to continue building a software platform to streamline the process of buying and selling homes. Compass, led by former Goldman Sachs Group Inc. banker Robert Reffkin, has used that capital to acquire competing brokerages and build technology intended to help agents stand out from its rivals.Representatives for Compass and the Vision Fund declined to comment.(Updates with plans for money raised in sixth paragraph. A previous version of this story added the dropped word million.)To contact the reporter on this story: Patrick Clark in New York at email@example.comTo contact the editors responsible for this story: Craig Giammona at firstname.lastname@example.org, Christine MaurusFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- WeWork’s bankers are pitching investors on what would be one of the riskiest junk-debt offerings in recent years, sending the company’s existing bonds into freefall.A roughly $5 billion financing package led by JPMorgan Chase & Co. is the company’s preferred option, rather than selling a controlling stake in itself to SoftBank Group Corp., according to people with knowledge of the matter. The structure and terms under discussion may change depending on investor appetite. Notably, the financing may include at least $2 billion of unsecured payment-in-kind notes with an unusually hefty 15% coupon, one person said. The deal may give the venture’s top private shareholders a final chance to avoid having their stakes severely diluted.That proposed yield -- nearly double what WeWork paid on its debut bond offering last year -- underscores skepticism among debt investors that the company will be able to stem its cash bleed and become profitable anytime soon. It’s a costly option that may however reward investors handsomely in the event of an actual turnaround.WeWork’s existing notes, $669 million of 7.875% bonds due in 2025, fell the most on record Tuesday morning after Bloomberg reported on the potential terms for a new debt package. The junk bonds dropped to a record low of 79 cents on the dollar to yield 13.4%, according to Trace, before retracing a bit to 79.5 cents.WeWork’s leaders hope to turn around the office-sharing venture with emergency borrowing, even if it’s expensive, rather than watching early backers’ equity and influence diminished in a rescue by SoftBank. Top stakeholders include controversial WeWork co-founder Adam Neumann, as well as venture capital giant Benchmark Capital. Their holdings soared in value and then cratered as investors spurned an attempted initial public offering, which was halted last month.“There may be little appetite for a cash-burning business facing other headwinds, even with a bond yield over 10%,” Bloomberg Intelligence analyst Arnold Kakuda said in a report last week.Only JPMorgan Can Fill WeWork’s $47 Billion Hole: Shuli RenJPMorgan’s bankers are discreetly sounding out investors and floating potential terms for the package of debt, which could help the unprofitable startup avoid running out of money as soon as next month. The financing relies on WeWork’s largest shareholder, SoftBank, following through with a plan outlined in a regulatory filing to contribute at least $1.5 billion in funding next year, according to one of the people, who asked not to be named discussing confidential talks.Representatives for WeWork and JPMorgan declined to comment.The board of WeWork parent We Co. is working with investment bank Perella Weinberg Partners LP as the company weighs its financing options, according to people familiar with the matter. A representative for the New York-based investment bank declined to comment.As recently as September, We appeared to be headed toward a rich valuation in its public debut before investors balked over concerns about the venture’s governance and mounting losses. The company ended up ousting Neumann as chief executive officer and postponing the offering. The delay leaves WeWork without a crucial source of funding: a $6 billion loan contingent on a successful IPO.The financing plan JPMorgan is developing could give the company some breathing room.The $2 billion of proposed unsecured debt may carry an additional sweetener for investors: equity warrants designed so that investors could boost their return to around 30% if the company gets to a $20 billion valuation, according to the person who described the structure. WeWork would pay only a third of the coupon in cash, while the rest of the interest would accumulate and become due at maturity, the person said.The financing package may also include around $1 billion of secured debt that would be sold to investors, as well as about $1.7 billion in letters of credit that would be split among participating banks, according to the people.JPMorgan’s assistance reflects the combination of financial and reputational interests as well as CEO Jamie Dimon’s mantra that the bank “be there in good times and bad” for its clients. The bank already is the lead lender on WeWork’s $650 million revolver loan and a major lender to Neumann. Its funds are among WeWork’s largest shareholders.There’s no guarantee the financing package will be completed, as it’s unclear if there’s sufficient demand from banks and debt investors. WeWork has said about 60 financing sources have signed confidentiality agreements as part of the process, indicating JPMorgan and the company are casting a wider net than is typical for such a deal, according to people familiar with the process.But as talks continue, people inside WeWork view a potential sale of a controlling stake to SoftBank as a backup plan, less desirable to employees whose holdings would shrink in such a deal, according to people with knowledge of their thinking. WeWork is expected to make a decision as soon as this week about which option it will proceed with.Since pulling its IPO, the startup’s new leaders have promised to rein in its once lavish spending. The venture has said it’s looking to offload several of the companies it recently acquired, plans to shutter an elementary school located in its corporate headquarters in New York and even put its $60 million corporate jet up for sale.Masayoshi Son, the head of SoftBank, last month tasked Chief Operating Officer Marcelo Claure, a former CEO of Sprint Corp. with cleaning up WeWork, people familiar with the matter said. Claure’s role has not yet been defined, but the people said he would be looking for ways to cut costs and boost revenue.Son, SoftBank Risk Too Much With WeWork Takeover: Tim Culpan(Updates with Perella in ninth paragraph)\--With assistance from Ellen Huet, Sridhar Natarajan, Edwin Chan, Claire Boston, Ed Hammond and Liana Baker.To contact the reporters on this story: Davide Scigliuzzo in New York at email@example.com;Michelle F. Davis in New York at firstname.lastname@example.org;Gillian Tan in New York at email@example.com;Sarah McBride in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Mark Milian at email@example.com, ;Nikolaj Gammeltoft at firstname.lastname@example.org, ;Michael J. Moore at email@example.com, David Scheer, Dan WilchinsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- JPMorgan Chase & Co. has hundreds of millions of dollars riding on the fate of WeWork across client portfolios and its own books. And then there’s the matter of the bank’s reputation.The biggest U.S. bank is leading discussions about a $5 billion debt package to help the office-sharing company avoid running out of cash as soon as next month. It’s a long way from the celebratory initial public offering the firm thought it’d be leading as a reward for years of investment from the bank and its clients.JPMorgan funds are among We Co.’s largest shareholders, trailing only SoftBank Group Corp., the company’s co-founders and venture capital giant Benchmark Capital. That’s taken the bank’s asset management clients on a wild ride with more than $1 billion of gains erased as We’s valuation peaked and plunged this year. Those stakes give yet another incentive to help turn WeWork around, on top of the hundreds of millions of dollars that JPMorgan has lent to the office-sharing company and co-founder Adam Neumann.The bank’s executives declined to detail its exposure to WeWork or describe the firm’s due diligence on its relationship on an earnings conference call Tuesday, only saying it wasn’t material in the quarter. The topic didn’t come up on the subsequent call with analysts.“I was disappointed there weren’t any comments on WeWork,” Edward Jones analyst Jim Shanahan said in an interview. “It’s been pretty top of mind and it would’ve been helpful if they’d actually detailed what their actual credit exposure is. Something just to give us a little bit of help with regards to this pretty sizable exposure.”The bank’s lead role in the rescue package stands in contrast with Goldman Sachs Group Inc. That firm, which invested its own money in WeWork and was set to lead the IPO with JPMorgan, isn’t involved in the latest lending discussions, people briefed on the matter said.JPMorgan’s stance reflects the combination of financial and reputational interests as well as Jamie Dimon’s mantra that the bank “be there in good times and bad” for its clients. JPMorgan’s chief has also been known to throw around the weight of his firm’s $3 trillion balance sheet to win clients and to get deals across the finish line.The firm indeed used several business lines in the pursuit of WeWork, under the premise that its IPO would not just be lucrative in its own right but one of many deals for an acquisitive landlord and frequent borrower -- as well as a key piece in a flood of SoftBank-backed offerings that could vault the bank’s status in Silicon Valley.Among JPMorgan’s exposures to the company:It’s the lead lender on WeWork’s $650 million revolver loanIt’s a lender, along with UBS Group AG and Credit Suisse Group AG, on a $500 million loan to Neumann backed by WeWork sharesThe bank has made $97.5 million in mortgages and other loans to NeumannIn good times, major investment banks’ ability to grab multiple pieces of an exciting startup’s financial picture is seen as an easy win for all parties. When things go south, it leaves the banks contemplating what represents throwing good money after bad, and the potential ripple effects from walking away -- such as angry asset management customers.JPMorgan funds secured the majority of their stake at valuations below $5 billion, meaning its clients were still up on their investments at the latest ranges being discussed before the IPO was pulled. The bank’s entities owned more than 5% of We Co., according to filings.While JPMorgan has the closest ties to WeWork, the turmoil may be more apparent in other banks’ third-quarter results. Earlier this month, Jefferies Financial Group Inc. said it wrote down the value of its investment in We by $146 million. Goldman Sachs, which reported Tuesday, probably also took a writedown on its stake in WeWork after plans for the IPO collapsed.A JPMorgan spokesman declined to comment.WeWork’s presence as a major lessee of commercial real estate also opens the door for indirect exposure from lending to buildings that are counting on the company as a tenant. JPMorgan is the third-biggest CRE lender among U.S. banks, according to data from Bloomberg Intelligence.One alternative to the JPMorgan-led deal is a bailout that hands control to SoftBank. No one has more at stake than SoftBank, which is already WeWork’s biggest shareholder and has poured billions into the firm.(Updates with comments from executives, analyst starting in 4th paragraph.)\--With assistance from Sridhar Natarajan.To contact the reporter on this story: Michelle F. Davis in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Michael J. Moore at email@example.com, Steve DicksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Shared office space company WeWork Companies Inc is leaning toward a near $5 billion financing package led by JPMorgan Chase & Co, instead of selling a controlling stake to Japan's SoftBank Group Corp, Bloomberg reported https://bloom.bg/2pl8JmL late on Monday. The debt package may include at least $2 billion of unsecured notes with a 15% coupon, Bloomberg reported.
SoftBank has prepared a financing package that would give it control over the shared office space company, a person familiar with the matter told Reuters on Sunday. WeWork and JPMorgan were negotiating a debt deal after the company's planned initial public offering was tabled last month as investor concerns grew about its valuation and its business model, Reuters reported earlier this month. SoftBank, WeWork and JPMorgan did not immediately respond to a Reuters request for comment.
(Bloomberg) -- Paytm is close to scoring $2 billion of new financing from investors including Jack Ma’s Ant Financial and SoftBank Group Corp., a person familiar with the matter said, describing a mega-deal that will raise the temperature in India’s increasingly heated financial payments arena.Rob Citrone’s Discovery Capital Management is also in discussions to join a funding round that values the country’s top online financial services firm at $16 billion, the person said, asking not to be identified talking about a private deal. The funding will be split evenly between equity and debt and is aimed at helping Paytm fend off an influx of rivals, the person said. Talks are in their final stages but the terms could still change, the person added.If a deal is finalized, Paytm could outstrip fellow high-profile Asian startups such as Grab and Gojek in valuation. Billionaire Paytm founder Vijay Shekhar Sharma is raising capital to protect the startup’s share of a potentially $1 trillion Indian payments market from newer entrants Facebook Inc., Alphabet Inc.’s Google and Walmart Inc.-owned Flipkart’s PhonePe. Over the past year, a string of new apps have made payments increasingly easy, bringing discounts and cash bonuses to young, smartphone-savvy users.Paytm remains the leader for now. The firm has in a decade become India’s biggest digital payments brand, attracting big names in investing from Alibaba co-founder Ma and SoftBank founder Masayoshi Son to Warren Buffett. Sharma got a huge boost in 2016 after India’s government moved to eliminate most of the nation’s paper money in circulation in a bid to curb corruption. His startup, a pioneer in the country’s nascent field, saw tens of millions of consumers and hundreds of thousands of businesses sign up for digital services in a matter of months.“India is a large market,” said Kunal Pande, head of financial services risk consulting at KPMG. “Digital payments adoption is growing quickly, yet there is room for massive growth as users get comfortable transacting digitally. The large business opportunity makes it attractive for both domestic startups and large global players.”Read more: Facebook and Google Chase a New $1 Trillion Payments MarketPaytm, which is also backed by Alibaba Group Holding Ltd., declined to comment in response to emailed questions. Ant had no immediate comment when contacted, while Discovery Capital and SoftBank declined to comment.Sharma is now extending his online empire into e-commerce and banking, even as others encroach on his turf. The Indian payments market remains a chaotic field where the rules are hazy on what players can offer, yet its promise has lured a string of competitors including Indian banks, its postal service and its richest man, Mukesh Ambani.Credit Suisse Group AG now estimates that the Indian digital payments market will touch $1 trillion by 2023 from about $200 billion currently. It’s a market with huge potential: Cash still accounts for 70% of all Indian transactions by value, according to Credit Suisse, and neighboring China is far more advanced with a mobile payments market worth more than $5 trillion.Ant Financial, China’s largest provider of internet financial services and one of Paytm’s earliest backers, has said it will continue investing in mobile-payment providers around the world to boost offshore revenue and buttress itself against rising competition and tighter regulation at home.It’s not clear how much SoftBank would contribute, but the Japanese company is going through a rocky stretch. SoftBank’s shares are down about 30% from their peak this year as investors, unnerved by the WeWork turmoil and Uber Technologies Inc.’s disappointing debut, grow skittish about startup valuations.\--With assistance from Lulu Yilun Chen, Hema Parmar and Vincent Bielski.To contact the reporter on this story: Saritha Rai in Bangalore at firstname.lastname@example.orgTo contact the editors responsible for this story: Arijit Ghosh at email@example.com, ;Sarah Wells at firstname.lastname@example.org, Edwin Chan, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- PT Tokopedia, the online marketplace backed by the SoftBank Vision Fund and Alibaba Group Holding Ltd., has begun discussions with potential investors for what’s likely to be its final private funding round before a dual stock market listing.Indonesia’s largest online mall is considering listing shares at home as well as in another as-yet-undecided location, Chief Executive Officer William Tanuwijaya told Bloomberg News. But he wouldn’t specify a timetable for an initial public offering, citing uncertain market conditions in a trade war.Tokopedia, the country’s most valuable startup after ride-hailing giant Gojek, is focused on its home market for now but an overseas listing should raise its profile while attracting new investors. Tanuwijaya said the startup he co-founded 10 years ago is aiming to break even next year. Its gross merchandise value should triple to as much as 222 trillion rupiah ($16 billion) in 2019, he said. Revenue is growing faster than GMV, while its community of sellers rose to 6.4 million from about 5 million last year, he added.“Dual-listing is most likely to be our approach” because the Indonesia-focused e-commerce site wants its consumers and sellers to also become shareholders, the 37-year-old founder said in an interview in Jakarta. “We are now in the process of picking the right partners who believe in our vision and mission.”SoftBank Vision Fund, Alibaba Lead $1.1 Billion Tokopedia RoundTokopedia is gunning for a listing at a time many of its peers around the world are tapping the brakes. Uber Technologies Inc.’s disappointing debut and the chaos surrounding WeWork’s botched IPO have put startups under pressure to prove their business model can lead to revenue and profit growth. The co-founders of Grab, Southeast Asia’s most valuable startup and another of SoftBank’s portfolio companies, have said they’re not planning an IPO any time soon.With a looming risk of a global recession, it’s crucial for large platforms like Tokopedia to establish a sustainable business by generating profits, said Chatib Basri, a former finance minister and senior lecturer at the University of Indonesia. “When there is a disruption to a company as big as Tokopedia, which has 90 million monthly active users, it could result in a systemic effect,” he said.Tokopedia’s advantage is its presence in an Indonesian e-commerce market projected to expand from $21 billion in 2019 to $82 billion by 2025, according to a study by Google, Temasek Holdings Pte and Bain & Co. Unlike peers Alibaba’s Lazada and Tencent Holdings Ltd.-backed Shopee, which operate across Southeast Asia, Tokopedia has chosen to expand deeper into rural areas of Indonesia, an archipelago of more than 17,000 islands where online shopping is still relatively under-developed.“Indonesia’s e-commerce penetration is still 4% to 5%, so the room for growth is still big,” Tanuwijaya said.\--With assistance from Viriya Singgih.To contact the reporter on this story: Yoolim Lee in Singapore at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Japan's SoftBank will invest in Mexican used car platform Kavak, the group's chief operating officer Marcelo Claure said on Monday, adding to SoftBank's growing portfolio in Latin America. "We are proud to join with and invest in Kavak Mexico," Claure, who oversees SoftBank Group Corp's Latin America investments, wrote on LinkedIn. Reuters reported in August that SoftBank was in advanced talks to invest in the three-year-old startup, after announcing earlier in the year a $5 billion fund to focus on Latin America.
(Bloomberg) -- WeWork is considering a bailout that will hand control of the co-working giant to SoftBank Group Corp., according to a person familiar with the matter, one of two main options to rescue the once high-flying startup.The Japanese investment powerhouse controlled by billionaire Masayoshi Son is convinced it can turn around the cash-strapped American company with the right financial controls in place, the person said, asking not to be identified talking about internal deliberations. WeWork’s board and backers however are also weighing another option: JPMorgan Chase & Co. is leading discussions about a $5 billion debt package, Bloomberg has reported.Either rescue package, or some combination of them, would ease a cash crunch that could leave the office-sharing company short of funds as soon as next month. We Co., the parent of WeWork, had been headed toward one of the year’s most hotly anticipated IPOs before prospective investors balked at certain financial metrics and flawed governance, turning the American giant into a cautionary tale of private market exuberance and costing the company’s top executive his job.The fast-growing, money-losing startup had been counting on a stock listing -- and a $6 billion loan contingent on a successful IPO -- to meet its cash needs.Son, SoftBank Risk Too Much With WeWork Takeover: Tim CulpanRead more: WeWork Is in Talks for $5 Billion Debt Package With LendersThe Wall Street Journal first reported that SoftBank may be discussing a deal to gain control of WeWork. Representatives for the Japanese company weren’t immediately available for comment Monday, a national holiday.SoftBank is already WeWork’s biggest shareholder but the proposed deal would shore up its control of the startup, the person said, declining to elaborate on when a decision on the competing offers might be reached. The Japanese company is in advanced talks to acquire more shares at a significantly lower valuation than the $47 billion WeWork sported in January, two people familiar with those discussions said last week. The New York Times has reported that members of the board would meet Monday to decide on which bailout to select.If the board opts for the SoftBank deal, the Japanese company will be taking on a troubled enterprise at a time it’s struggling to convince the market about its longer-term investment vision. It’s also busy wooing potential investors for a successor to its record-breaking Vision Fund.Read more: SoftBank’s Son Is ‘Embarrassed’ By Record, Impatient to ImproveSon is going through a rocky stretch after repositioning his company from a telecommunications operator into an investment conglomerate, with stakes in scores of startups around the world. He built a personal fortune of about $14 billion with spectacularly successful bets on companies such as Alibaba Group Holding Ltd. But SoftBank’s shares are down about 30% from their peak this year as investors, unnerved by WeWork and Uber Technologies Inc.‘s disappointing debut, grow skittish about startup valuations. In an interview with the Nikkei Business magazine, Son said he is unhappy with how far short his accomplishments to date have fallen of his goals.WeWork and Uber may be losing money now, but they will be substantially profitable in 10 years’ time, Son said in that interview. But at a private retreat for portfolio companies late last month, he had a different message: get profitable soon. At the gathering, held at the five-star Langham resort in Pasadena, California, Son also stressed the importance of good governance. Just days later, SoftBank led the ouster of WeWork’s controversial co-founder Adam Neumann.“WeWork has retained a major Wall Street financial institution to arrange a financing,” a representative for the U.S. company said in a statement on Sunday. “Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”(Updates with details of SoftBank investments from the sixth paragraph)To contact the reporters on this story: Gillian Tan in New York at email@example.com;Michelle F. Davis in New York at firstname.lastname@example.org;Davide Scigliuzzo in New York at email@example.comTo contact the editors responsible for this story: Liana Baker at firstname.lastname@example.org, ;Tom Giles at email@example.com, Edwin Chan, Virginia Van NattaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The package would significantly increase the stake of SoftBank, which already owns around one third of WeWork, and further dilute the influence of co-founder Adam Neumann, said the person, who declined to be identified because of the sensitivity of the matter. Reuters had reported that SoftBank was in negotiations to make a $1 billion investment to enable WeWork to go through a major restructuring. Without a fresh infusion of cash, WeWork risks running out of money as early as the end of the December, the person said.
Vir's disastrous IPO deals another blow to Japan's SoftBank <9984.T>, which is still smarting from the botched initial public offering of WeWork last month following increased investor skepticism regarding the office-sharing startup's path to profitability. SoftBank's <9984.T> $100-billion Vision Fund owns 19.8% of Vir after the offering, a slight decrease from its pre-IPO stake of 21.2%. Investors and experts tracking recent IPOs believe companies thinking of going public in the next 12-18 months would be extremely wary of the recent backlash against loss-making firms.
(Bloomberg) -- Mubadala Investment Co., which committed $15 billion to SoftBank Group Corp.’s Vision Fund, has yet to decide whether it’s signing up for the next round.The original $100 billion Vision Fund holds stakes in Uber Technologies Inc., which has struggled in the public markets, and WeWork, the office leasing startup that was recently forced to pull its plans for an initial public offering. Now, the fund may be facing a writedown of billions of dollars, according to analyst estimates.Mubadala, the Abu Dhabi sovereign wealth fund, is still “evaluating” its options, but will continue working with SoftBank, Ibrahim Ajami, Mubadala’s head of ventures, said on Tuesday at the Bloomberg Invest conference in London. WeWork, which was valued at $47 billion in a funding round earlier this year but was likely to fetch only about a quarter of that in a listing, is one company of many in the $100 billion fund, he said.“We invested in a fund which is a portfolio of companies versus one company,” Ajami said. “We are very focused on the performance of Vision Fund 1,” he added. “WeWork is a 5% holding in Vision Fund 1. There are 80 other companies.“Industrywide, Ajami said that fears over high tech valuations are overblown, adding that the backlash to companies with the “unicorn” label, meaning startups valued at $1 billion or more, is silly.“All the sudden, there’s this perspective where unicorns are bad and everybody should not use the word unicorns,” Ajami said. “If you have a business with strong management and a clear strategy and you’re executing, the public markets will reward you for that.”Mubadala started a $400 million European fund focusing on tech investments, adding to the billions it has spent to diversify the emirate’s wealth beyond oil.Instead of shying away from unicorns, prospective investors should focus on a return to fundamentals, Ajami said. SoftBank managing partner Saleh Romeih agreed. A period of “immense liquidity” has lead to some companies being overvalued, and investors must have a path to profitability, Romeih said.In the beginning, “the ambitions and vision of Masayoshi Son outgrew the balance sheet of SoftBank,” Romeih said. “The fund was a better vehicle to express that vision.” Today, he added, “We’re just at the advent of a number of technologies that are going to transform traditional industries.”To contact the reporters on this story: Giles Turner in London at firstname.lastname@example.org;Amy Thomson in London at email@example.comTo contact the editors responsible for this story: Giles Turner at firstname.lastname@example.org, Anne VanderMey, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Wirecard AG raised its long-term forecasts, saying it expects operating profit to climb to more than 3.8 billion euros ($4.2 billion) in 2025 on growth in online payments and partnerships with the likes of SoftBank Group Corp.That’s a boost of about 15% from a previous prediction for earnings before interest, taxes, depreciation and amortization. Yet investors weren’t fully convinced by the projections, which included sales growth that outpaced profitability increases. Wirecard fell 3.2% as of 11:25 a.m. in Frankfurt.The longevity of the outlook means it could be more of a “mirage” than a vision, said Neil Campling, an analyst at Mirabaud.“Not even perhaps the greatest enabler of Fintech, Visa, has the confidence to give more than one year outlook,” Campling, who has been rating Wirecard “sell” for months, said in an emailed note.Wirecard is moving on from a series of Financial Times reports on suspicions of fraud at some units in Asia caused the firm’s shares to whipsaw earlier this year. The stock has since recovered as Wirecard formed a $1 billion partnership with Japan’s SoftBank in April, won clients including home-improvement retailer Leroy Merlin in Brazil and African airline Royal Air Maroc, and raised its 2019 outlook in August.“In addition to ongoing success with smaller and medium-sized customers and business partners, the increased focus on large companies will lead to a significant increase in transaction volumes -- while at the same time realizing profitable economies of scale,” Wirecard said in a statement released ahead of an investor meeting in New York later Tuesday.Wirecard said it plans to “greatly expand” its global footprint and expects digital payments to increase as retailers get to know their customers better when they pay digitally, and shoppers benefit from added services such as credit and insurance. The company now targets transaction volumes of more than 810 billion euros in 2025, up from a previous forecast of 710 billion euros, and increased its sales forecast by 20% to more than 12 billion euros.SoftBank said in April it would invest $1 billion via convertible bonds into Wirecard, opening up its portfolio of startups to pen their own deals with the payments company. Wirecard is already developing new finance products with Auto1 Group, the used-car-sales platform backed by SoftBank.(Updates with analyst comment in third paragraph.)\--With assistance from Elisabeth Behrmann.To contact the reporter on this story: Stefan Nicola in Berlin at email@example.comTo contact the editors responsible for this story: Giles Turner at firstname.lastname@example.org, Andrew BlackmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Masayoshi Son’s startups have had a rough few months, from a botched initial public offering by WeWork to a sharp decline in shares of Uber Technologies Inc. Now analysts are beginning to calculate that the damage for Son’s SoftBank Group Corp. will likely reach into the billions of dollars.Mitsubishi UFJ Morgan Stanley Securities Co. cut its profit estimate for SoftBank’s Vision Fund, its main investment vehicle, by 580 billion yen ($5.4 billion) to an operating loss of 367.6 billion yen for the September quarter, citing declines in the stock prices of Uber and Slack Technologies Inc. and the withdrawn WeWork IPO. Sanford C. Bernstein & Co. estimates that Vision Fund’s writedown alone could be as much as $5.93 billion, with another $1.24 billion drop for the portion of WeWork owned by SoftBank Group.Son is going through a particularly rocky stretch after repositioning SoftBank from a telecom operator into an investment conglomerate, with stakes in scores of startups around the world. He built a personal fortune of about $14 billion with strategic bets on companies such as China e-commerce giant Alibaba Group Holding Ltd. But the recent troubles have weighed on SoftBank’s shares, pushing them down about 30% from their peak earlier this year as investors grow skittish about startup valuations.“Profits in the [SoftBank Vision Fund] segment may still see considerable volatility ahead,” Mitsubishi UFJ analyst Hideaki Tanaka wrote.Uber’s share price drop was the main culprit for Vision Fund’s poor performance in the second quarter, Tanaka wrote. He also reduced SoftBank Group’s fiscal year operating profit to 1.01 trillion yen, from 1.59 trillion yen.SoftBank may book a $3.54 billion drop in the value of its Uber stake, a $750 million decline for Guardant Health Inc. and take a $350 million hit for Slack, according to Chris Lane, an analyst at Sanford C. Bernstein. Lane said the combined writedown for WeWork may be as much as $2.82 billion, assuming a slide in the company’s valuation to $15 billion from $24 billion, but remains uncertain. He said his estimates represent a worst-case scenario and may be offset by gains from other unlisted companies.In an interview with the Nikkei Business magazine, Son said he is unhappy with how far short his accomplishments to date have fallen of his goals.“The results still have a long way to go and that makes me embarrassed and impatient,” Son said. “I used to envy the scale of the markets in the U.S. and China, but now you see red-hot growth companies coming out of small markets like in Southeast Asia. There is just no excuse for entrepreneurs in Japan, myself included.”“It only just began and I feel there is tremendous potential there,” Son told Nikkei Business. The strategy is to invest in companies that share his vision of a world being reshaped by artificial intelligence, he said.SoftBank Gives ‘Very Public Lesson’ to Founders in WeWork OusterWeWork and Uber may be losing money now, but they will be substantially profitable in 10 years’ time, Son said in the interview. At a private retreat for portfolio companies late last month he had a different message: become profitable soon. At the gathering, held at the five-star Langham resort in Pasadena, California, Son also stressed the importance of good governance. Just days later, SoftBank led the ouster of WeWork’s controversial co-founder Adam Neumann.(Updates with Sanford C. Bernstein’s projections from second paragraph)To contact the reporters on this story: Pavel Alpeyev in Tokyo at email@example.com;Takahiko Hyuga in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Peter Elstrom at email@example.com, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
If the talks are successful, WeWork, which had to abandon an initial public offering last week because of investor concerns about how it was valued and its business model, will seek to negotiate a $3 billion debt deal with JPMorgan Chase & Co , the sources said. WeWork and SoftBank did not immediately respond to requests to comment.
Oct.16 -- SoftBank Group Corp. is in discussions to provide WeWork with roughly $5 billion in rescue financing, according to a person familiar with the matter. Bloomberg's Liana Baker has more on "Bloomberg Markets: The Close."
Oct.14 -- WeWork is said to prefer JPMorgan’s financing package as opposed to a rescue by SoftBank. Bloomberg’s Davide Scigliuzzo reports on “Bloomberg Markets: China Open.”
WeWork's fall from grace may be far from over. Just a few weeks ago it was due to hold a multibillion dollar IPO. That got pulled as its valuation tumbled. Now the shared office space company could come under the full control of SoftBank. A Reuters source says the Japanese investor is set to up its stake as part of a restructuring. It's expected to put in an extra billion dollars on top of earlier investments. Without the money WeWork could run out of cash in late December, the source says. WeWork lost nearly two billion dollars in 2018, and burned through even more than that in the first half of this year. That hasn't slowed it down. Reuters analysis shows WeWork actually stepped up the pace of new office openings in recent months. But change could be coming, with or without SoftBank. WeWork founder Adam Neumann was ousted last month. The firm's new bosses want to refocus on the core business of shared office spaces. Fringe activities - like its WeGrow private school in New York - face the chop.
WeWork was supposed to be the next big success for Japanese tech investor SoftBank. Then a planned IPO for the shared workspace firm got pulled as its valuation tumbled. And that leaves SoftBank with a headache. Founder Masayoshi Son is pressing ahead with his massive Vision Fund 2. He's promised it will raise 108 billion dollars to invest in tech startups. But Reuters sources say he's struggling to raise the money. Son had promised that Apple and Microsoft were among the investors. But it's unclear how firm their involvement is, and neither tech firm will comment. Sources say 38 billion dollars from SoftBank itself is the only big commitment so far. Some would-be investors may now be questioning Son's judgement. SoftBank and his first Vision Fund put over ten billion dollars into WeWork - with returns on that money now looking uncertain. Son still has a track record to boast about though. Above all, there's the 20 million dollars he put into China's Alibaba Group in 2000. That stake in the ecommerce giant is now worth over 100 billion dollars.