The move is strategic in the sense, WeWork aims to boost its funding levels before it asks for funds from investors through its IPO.
According to a source familiar with the matter at hand, in a move aimed at fueling investor confidence in the company, shared office space manager WeWork Cos is set to raise $3 – $4 billion in debt before it launches its initial public offering.
The development comes in the wake of Uber and Lyft launching their respective IPOS earlier this year, with sky high expectations only to face criticism from investors over their steep losses and lack of a roadmap and timetable towards profitability.
WeWork has faced questions about the sustainability of its business model, which is based on short-term revenue agreements and long-term loan liabilities. A substantial debt offering could allow it to pitch itself to potential investors in a planned initial public offering (IPO) as having sufficient funding to see itself to profitability.
According to the source, funds raised through the debt offering, separate from funds WeWork raises through its IPO, could grow as big as $10 billion over the next few years.
The source has cautioned that there is no certainty that the offering will ultimately materialize.
WeWork has met with the chief executives of investment banks Goldman Sachs and JPMorgan Chase & Co to discuss the debt offering, said the source.
Spokespersons for WeWork, Goldman Sachs and JPMorgan declined to comment.
According to data provider PitchBook, New York-based WeWork has raised around $8.4 billion.
Earlier this year in January 2019, SoftBank had increased its stake in WeWork by $2 billion in a deal that was billions of dollars below what WeWork had hoped to raise to fund the growth of the company and buy out existing shareholders.
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