WeWork is reportedly now seeking for a $2.75 billion credit line from Wall Street banks as it prepares for its upcoming initial public offering (IPO). The New York-based startup company has already submitted its application for an IPO to the Securities and Exchange Commission but it has yet to announced the exact date.
According to reports, WeWork is apparently now in talks with various Wall Street banks. Negotiations are reportedly being led by JPMorgan Chase, which is helping the tech company find a suitable candidate with the best financing terms. The company's upcoming IPO is raring to become one of the biggest for the year, likely in league with tech startups such as Uber and Lyft.
The American company, which mainly provides shared workspaces and offices for startups, entrepreneurs, businesses, and large corporations, is backed by major investors such as Softbank Group. It was originally founded in 2010 in New York City. Since then, the company has diversified its offerings to include the actual designing and building of shares spaces and offices.
WeWork's offices provide services not seen in similar firms. This includes access to health insurances, an internal social network for members, exclusive social events, retreats, and workshops. The company has also now started to offer other services, such as apartment rentals and even renting to educational institutions such as elementary and special training schools.
Even with its upcoming IPO, WeWork will still need access to a hefty amount of liquidity to ensure its steady growth. The money is needed to sustain its expansion, which includes the building and designing of new office spaces.
The company, which was recently valued at around $47 billion, currently has around 10 million square feet of office spaces located in 86 cities across 32 countries around the world.
Securing a credit line prior to an IPO is also part of the process of going public. Companies will often seek favorable rates from Wall Street banks, which will, in turn, benefit from the company once it goes public.
For a company like WeWork, a large amount of credit is required. The firm recently burned through more than $2.3 billion in cash last year, fuelled mainly by its rapid global expansion.
This year, the company announced that it has managed to lessen its losses, with only $264 million spent so far in the first quarter of this year.
WeWork's fate in the public stock market is still up for debate and its IPO will be the true test of how investors feel about it as a company. Tech companies such as Uber and Lyft haven't fared so well, with both companies still trading well below their respective IPO prices.
