SoftBank planned to invest $16B into WeWork. That number just got way smaller.

Saudi and Abu Dhabi backers didn't have the appetite for risk, interest in takeover of co-working firm: FT

Jan.January 07, 2019 04:00 PM

Masayoshi Son (left) and Adam Neumann (Credit: Getty Images)

SoftBank has slashed a potential $16 billion investment in WeWork to $2 billion, after the Japanese megafund’s backers expressed concern over its free flow of capital to the flexible office space company.

Backed by the sovereign wealth funds of Saudi Arabia and Abu Dhabi, and led by Masayoshi Son, SoftBank’s $100 billion Vision Fund was expected to invest another $16 billion in WeWork over the coming years. But in December, reports surfaced that its backers had balked at the massive investment in WeWork, which is yet to turn a profit and last year was expected to lose $2 billion.

On Monday, citing sources, the Financial Times reported that the funding is expected to be significantly reduced to $2 billion, and would not come from the Vision Fund, but from another arm of Softbank. The funding could reportedly be announced this week.

The scaled-back investment would also mean that SoftBank will not take a majority stake in WeWork, as was previously rumored. If the $16 billion investment had gone ahead it would have been the largest investment ever in a tech startup and brought the total investment in WeWork by SoftBank and affiliates to more than $24 billion.

WeWork declined to comment. SoftBank did not immediately respond to a request for comment.

To date, the Vision Fund has committed $8.4 billion to WeWork, including a $3 billion stake announced in November. That funding round boosted WeWork’s valuation to $45 billion.

The investor caution also reflects uncertainty in the technology market, as industry stocks have declined amid a sell-off in equity markets. In November, Zillow lost almost $2 billion overnight in as investors offloaded stock. [FT] — David Jeans

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