According to Reuters, JP Morgan has been asked to head an upcoming debt offering by The We Company.
Capitalizing on an opportunity
If JP Morgan Chase & Co. decide to work on the offer provided by the WeWork owner, it could be in pole position to lead the company’s planned initial public offering (IPO) scheduled for later this year. Sources suggest that the process for debt offering could start by next week subject to clearing of regulatory hurdles.
WeWork has not directly hired the bank to lead its IPO. However, the common expectation is that if a lender takes part in the debt offering, it will have a significant impact on the IPO. The sources, who spoke on the condition of anonymity, said that other banks, like Goldman Sachs, could play a significant role in the upcoming IPO.
What could the public offering look like?
WeWork is looking to raise $5 billion to $6 billion from its public offering which is scheduled for September, according to a Reuters report. This would be the third biggest listing on the US stock market this year, and JP Morgan has already led one of them for Lyft Inc. in March. However, the biggest IPO of Uber Technologies Inc. was taken over by its competitor Morgan Stanley in May. Grabbing WeWork’s listing could give the bank an edge over its peers.
Note that Goldman Sachs is leading US IPOs in 2019 and even Bank of America Merrill Lynch is ahead of JP Morgan, states Refinitiv data. For The We Company, a New York-based firm founded in 2010, the year could be the most eventful it has seen. At a valuation of $47 billion, it is one of the biggest private companies in the world today. It focuses on startups and provides co-working spaces to both freelancers and entrepreneurs. Japan’s SoftBank Group has already poured millions into the firm.
The only problem with the company is its business model- some analysts don’t think that its model is sustainable and is based on long-term liabilities and short-term revenues. In essence, the company mimics the problems faced by both Lyft and Uber during their respective public listings. Both the companies had high-valued offerings but have struggled to keep up with tumbling shares and their eventual path to profitability.
A spokesperson from Goldman Sachs declined to comment on the story while representatives from WeWork and JP Morgan are yet to make a statement.
