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Goldman Sachs sold the WeWork stake and awarded a lower rating than the IPO pitch



  • Goldman Sachs had sold part of its stake in WeWork when the investment bank established the coworking company for a very lucrative IPO mandate.
  • The bank dumped on two previous fundraising rounds when the WeWork mega-investor gave SoftBank employees and former investors the opportunity to sell their shares, so a person who knew about Goldman's actions had a more modest one Valuing the company as $ 47 billion earlier this year, or $ 61- $ 96 billion, the company's investment bankers said the company's top executives could join an initial public offering.
  • More information about WeWork can be found here.

Goldman Sachs, one of the top underwriters at WeWorks' recently discontinued IPO last month, sold his stake in the co-working company ahead of his planned IPO for a person who knew about the Wall Street Bank's actions.

This means that Goldman applied for WeWork's services, prompting investors to buy repurchased public shares worth $ 47 billion recently. Reduction of their own exposure.

The investment bankers are in a different category than those investing for Goldman, and the WeWork investment was made by the merchant banking division. The regulations require so-called Chinese walls between such divisions to prevent the exchange of privileged information.

The bank has been unloading shares on two previous fundraising rounds as the WeWork mega-investor gave SoftBank employees and early investors the opportunity to offer shares, the individual said. The sale of a Share may be considered prudent risk management or a sign that the Company has become pessimistic about a company's prospects.

Goldman has rated the company "more modestly" than WeWork's $ 47 billion valuation on Tuesday

Meanwhile, the company's investment bankers had sought an IPO mandate by serving senior executives WeWork proposed to get a public market rating of between $ 61

billion and $ 96 billion, the Financial Times reported. These values ​​were based on WeWork's sales forecasts, according to a second person who knows the pitch.

Banks like Goldman typically look for eagerly awaited IPOs for opportunities to collaborate with hot-tech startups, and highlight those relationships and commitments when they promote the IPO. This can take the form of small holdings or loan commitments.

A spokesman for Goldman Sachs declined to comment.

Goldman announced a third quarter profit on Tuesday, announcing an impairment of $ 80 million on the value of its WeWork share. This represented a decline of more than 50% in the middle of the year. At the end of September, the bank estimated the value of its investment at $ 70 million.

Depreciation was much lower than predicted by Betsy Graseck, an analyst with Morgan Stanley, last week. Graseck said it expected Goldman to reduce its stake by $ 264 million in the third quarter, based on an estimate of the size of the bank's stake it set at 1.4%.

The gap is most likely due to the fact that Graseck did not know or could not have known that Goldman had reduced his stakes, the person said.

: Goldman Sachs It is unclear what rating Goldman Sachs assigned to WeWork to determine the value of his minority stake, but executives have stated in the past that they tend to do relied on observable events such as fundraisers and sales. The company also superimposes a cash discount to offset the fact that a stake can not simply be sold.

The last time WeWork raised money was in January, when SoftBank acquired $ 47 billion worth of shares. The company also bought $ 23 billion in employee and investor stock, which equates to a mixed $ 36 billion, according to the Wall Street Journal, which cited anonymous sources.

Goldman acquired its stake in WeWork as part of a series of fundraising rounds that, according to the FT, at least ended in 2014.

In August, WeWork selected Goldman and JPMorgan as its premier underwriters.

WeWork last discontinued its IPO month and pulled back its prospect after investors asked questions about the coworking company's business model and conflicts of interest with founder and former CEO Adam Neumann.

The Company is currently in discussions with JPMorgan, an investor and lender to Neumann and the Company, to raise up to $ 5 billion to cover an expected financial crisis later this year. Goldman is not involved in these rescue financing talks.


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