(Reuters) - U.S. office-sharing firm WeWork on Thursday said it will sell control of its China division to one of its investors - private equity firm Trustbridge Partners - as it steps back from a competitive market where it has suffered low-occupancy rates.
The deal effectively offloads the China unit away from the parent, which has faced fundraising issues since a failed attempt to go public in 2019.
WeWork said it will maintain a minority stake and "participating interest" in WeWork China and that it will receive an annual fee from the unit for use of the WeWork brand.
Concurrent with the deal, the division has received $200 million in funding from existing investors, WeWork said. Michael Jiang of Trustbridge Partners will serve as WeWork China's acting chief executive officer.
Trustbridge and Singapore state investor Temasek Holdings (Private) Ltd held talks with WeWork's Chinese unit over increasing their stakes and taking majority ownership, Reuters reported in January.
WeWork shelved its initial public offering in 2019 after investors grew wary of its losses, business model and corporate governance, leading to the resignation of co-founder and former chief executive officer Adam Neumann.
It has since undergone significant management change yet remains enmeshed in lawsuits over a $3 billion tender offer to existing shareholders.
Last month, the New York-based startup said it had almost halved its cash-burn rate from the end of last year and obtained a $1.1 billion commitment in new financing from Japan's SoftBank Group Corp.
SoftBank, meanwhile, has been steadily offloading assets to raise money after a spending spree late last decade. This month, it said it would sell chip designer Arm Ltd, purchased in 2016, to semiconductor giant Nvidia Corp for $40 billion.
(Reporting by Akanksha Rana in Bengaluru and Josh Horwitz in Shanghai; Editing by Aditya Soni and Christopher Cushing)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU