WeWork IPO Delay Could Have Wider Implications on Investment
This week WeWork shelved its initial public offering (IPO) after struggling to drum up investor interest in the multibillion-dollar listing.
Plans were in place to launch a roadshow that would raise interest in the IPO, thus establishing the price and share listing next week. In a last minute decision, WeWork has delayed the IPO and says it will take place towards the end of 2019 instead.
The influence the company’s co-founder and chief executive Adam Neumann has over the company as well as its increasing operating losses have been cited as reservations from institutional investors over its floatation.
Reuters reports that WeWork’s largest investor, SoftBank has thrown around the idea of supplementing up to $1 billion to support the IPO, but WeWork figured it would manage. In order to secure a future line of credit ($6 billion), WeWork will need $3 billion, which it reckons it can come just short of. Said line of credit is also contingent on the IPO happening before the ned of the year however.
In the last 20 years, UK-based entrepreneurs have built 72 companies, including 13 in the past year, that have exceeded a valuation of US$1billion, like WeWork. As the UK looks to expand its reach in the economic sphere, investor sentiment is crucial to the success of the next generation of British Unicorns.
Recent NextHash research also found that a quarter of Brits – 24% – agree that seeing Unicorns and their IPOs fail or not fulfil their potential, such as Uber, has made investing into Initial Public Offerings unpalatable to them, meaning that this delay could have further impacts across the business segments.
The Founder and President of NextHash, Ana Bencic, commented: “With various political and economic influences affecting businesses today, investors are looking for ways to gain rapid and secure returns on their investment on an international scale. IPOs have been receiving a substantial amount of negative press, in particular, WeWork and its operating losses and valuation, and this is worrying both institutional and retail investors who are looking for a better and more secure solution to access internationally facing high growth startups.
“Blockchain investment platforms can help make global growth finance for scaling technology businesses more transparent and easy to access. Both individual and institutional traders will be able to engage more with blockchain technology-backed trading, where the businesses are backed by a Digital Security Offering and there exists a greater potential to make rapid returns on their investments than the traditional routes. As this is adopted into the mainstream, it will revolutionise the way companies in Britain will access scale-up finance, how investors will access these businesses, and how illiquid shares can be traded into liquid capital in ways never imagined before.
“As Britain prepares for Brexit and WeWork shelve its IPO, new forms of investment could be crucial for these scaling businesses as well as global investors who want to maintain access to the UK marketplace.”