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Additional $2B To Be Invested In WeWork By Japan’s Softbank

Additional $2B To Be Invested In WeWork By Japan’s Softbank
According to media reports quoting sources, this year another $2 billion would be invested in shared working space app WeWork from Japan’s SoftBank Group. With the injection of this new investment, the total investments by the Japanese conglomerate SoftBank into the   office space provider online platform would amount to more than $10 billion.
According to the reports, WeWork would be valued at about $47 billion because of the latest investment by the Japanese firm. The media reports also added that at a valuation of WeWork at $20 biillion, the previously purchased warrants would be converted into equity in a separate move by SoftBank. The first report about the possible injection of fresh investments into WeWork by SoftBank was published by The Financial Times earlier on Monday.
The new round of investment would further extend the minority stake of Softbank in WeWork and the deal was expected to be made very soon. The reports however stressed that the latest investment form SoftBank into WeWork would not be made from the Vision Fund of the Japanese firm.
Sogtbank’s The Vision Fund has Saudi Arabia as the biggest investor and the early investments in WeWork were majorly backed by the country. Saudi Arabian contribution has made the kingdom in The Vision Fund has also made it stakeholders in other technology companies which include the ride-hailing app company Uber.
Following the completion of the announced new investment by SoftBank into the loss making WeWork would make the total amount of investments to about about $10.4 billion.  The announcement of the new investment in early investments in WeWork was made amidst declines in global stock markets which has in turn impacted the value of technology stocks.
There are rising fears and concerns about a possible slowdown in global growth and over the uncertainty surrounding the Sino-U.S. trade war. This has resulted in a fall of more than 40 per cent in comparison to their October high in one portfolio company – the publicly listed chipmaker Nvdia.
The new investment in WeWork by SoftBank comes after the Japanese conglomerate raised $23.5 billion last month from the IPO that was launched by its Japanese telecom unit which was also the largest ever IPO of Japan. In the unit's trading debut last month, the shares of the company dropped by 15 per cent which resulted in about $9 billion in value being wiped off the market for the company and that stock is trading as 5 per cent below the IPO price currently.
In public statements, SoftBank group has expressed their bullish confidence on the merit of the WeWork investment. Japan, where SoftBank and WeWork have a joint venture, is the fastest-growing market for WeWork, said SoftBank Corp CEO Ken Miyauchi last month.
Some Silicon Valley investors have however been sceptical of WeWork. According to tech investors, the company is consider3ed to be an over-valued real estate play and therefore it is susceptible to a property market downturn.

Christopher J. Mitchell

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