WeWork Gives Away Control Of China Unit To Existing Investors In $200M Deal

SoftBank Group Corp SFTBY-owned WeWork is selling a majority of the stake in its Chinese unit to existing investors, Reuters reported early Thursday.

What Happened: The investors led by venture capital firm Trustbridge Partners are making a 200 million follow-on investment in the WeWork Chinese unit.

As a result of the funding, Michael Jiang, an operating partner at Trustbridge, has been appointed acting CEO of WeWork China with immediate effect, the co-working space company said in a statement.

“This investment is a testament to our business and in Trustbridge we have truly found the best local partner for WeWork China's next chapter,” WeWork CEO Sandeep Mathrani said.

“Trustbridge firmly believes the demand that WeWork provides will only continue to increase,” added Trustbridge Managing Partner Fang Ge.

Why It Matters: Singapore’s Temasek Holdings and Trustbridge had been in negotiations with WeWork China on purchasing a majority stake in the company.

A proposal that valued the China unit at $1 billion was submitted to SoftBank at the end of 2019, according to Reuters.

It was thought at the time that if WeWork and parent SoftBank accept the proposal, it would reduce financial stress on both the companies. 

Last month, the Masayoshi Son-led conglomerate said it was pumping $1.1 billion into WeWork to help offset the impact of the COVID-19 pandemic.

The Japanese group’s latest investment is in addition to the $10 billion it has already infused into the office space company.

Price Action: SoftBank OTC shares closed nearly 2.3% lower at $29.91 on Wednesday.