Shared workspace firm Wework said Thursday that it had secured a $200 million investment in its loss-making China operations led by private equity firm Trustbridge Partners, which assumed control over the unit’s operations.
Why it matters: The troubled co-working firm is pulling back from its aggressive expansion and cutting expanses after its dramatic downfall last year, which sank its valuation to $2.9 billion from $47 billion.
- Opportunities brought by the Covid-19 pandemic could help buoy prospects for the China unit, which the company has said faces regulatory hurdles.
READ MORE: INSIGHTS | Will co-working survive WeWork?
Details: Parent firm We Co. relinquished operational control of the company to Trustbridge Partners, according to Bloomberg, but will collect an annual fee for the use of the Wework brand and services.
- Trustbridge Partners operating partner Michael Jiang was appointed Wework China’s acting CEO, according to a company statement. Before joining Trustbridge, Jiang was a senior vice president at services mega-app Meituan.
- Both Wework and Trustbridge said they see a growing demand for space-as-a service in China as companies “reassess their real estate portfolio and adapt to the new needs of workers in a post Covid-19 world.”
Context: Wework China opened its doors in 2016 and now operates around 100 locations across 12 cities, serving more than 65,000 members. In December, the company managed 120 locations.
- In January, Trustbridge and Singapore state investor Temasek Holdings were reportedly in talks to purchase a majority stake in Wework China, which valued the business at $1 billion, significantly less than its $5 billion valuation in September 2018.
- Wework’s Greater China region earned $93.56 million during the first half of 2019, accounting for 6% of the company’s total revenue. The company’s US and UK operations contributed the lion’s share.
- Ucommune, a Wework China rival, walked away from a $100 million US IPO in favor of a backdoor listing, a maneuver allowing companies list publicly through a merger or acquisition.
Disclosure: Ucommune is a TechNode investor.