WeWork launches China unit with $500 million funding from Hony, SoftBank
HONG KONG – Co-working space startup WeWork said on Thursday it has set up a Chinese unit with the backing of China’s Hony Capital and Japan’s SoftBank Group Corp to tap booming demand for shared office space in the world’s second-largest economy.
SoftBank and Hony Capital, one of China’s largest private-equity firms, led a $500 million investment to set up WeWork China.
The funds will be used to expand beyond current locations Beijing and Shanghai to at least five more large cities in the next six to 12 months, WeWork co-founder and Chief Executive Officer Adam Neumann told Reuters in an interview.
State-owned real estate developer Greenland Group and hospitality company Jin Jiang International (Holdings) Co Ltd – parent of Hong Kong-listed Shanghai Jin Jiang International Hotels Group – will also invest in the local unit, he said.
“By creating local entities we allow ourselves to take local management, give them local equity, incentivize them locally, operate the company under local law, respecting all the different cultures and the different rules that exist,” Neumann said.
The announcement follows a similar move unveiled earlier this month by New York-based WeWork to enter Japan’s market with a 50:50 venture with SoftBank. The company will launch its first location in Tokyo in 2018.
WeWork, which provides shared office space for users such as entrepreneurs and freelancers as well as large corporations, operates more than 155 properties in 16 markets including the United States, its biggest market, Canada, Germany and China, where it’s present in the country’s two main cities.
Neumann said WeWork could soon unveil other local units as well, with SoftBank also seen taking a stake in those businesses. Having separate local entities in different countries gives WeWork the flexibility to take some of those units public eventually, while keeping others under the umbrella of the parent, he added.
“We’re not going to do too much, only in markets that are tremendously large, but in one or two more markets you’re going to see us doing it, probably quite soon,” Neumann said. -Reuters