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WeWork South Africa has reassured its South African members and stakeholders that its operations will not be impacted by a potential bankruptcy filing to be lodged by WeWork Global in the US.
In a statement on Tuesday, 1 November 2023, the company stressed it was an entirely separate entity, 100% owned by real estate investor SiSebenza, and is not affiliated with WeWork Global.
The statement comes after a report from the Wall Street Journal that WeWork Global was preparing to file for bankruptcy as early as next week.
A company spokesperson told Bloomberg they would not comment on “speculation” and pointed to a forbearance agreement with its creditors, filed on Tuesday.
The spokesperson said this would give WeWork more time to engage with its financial stakeholders on its strategy to enhance its capital structure.
WeWork opened its first location at The Link in Johannesburg in 2019, followed by WeWork 80 Strand in Cape Town, and WeWork 155 West Street in Sandton.
It initially partnered with Redefine Properties for its first location at The Link.
One of its first big customers was Naspers, who said its team would move to the offices when it opened in August 2019.
Regardless of whether WeWork files for bankruptcy, WeWork South Africa CEO Stefano Migliore and SiSebenza executive director Andrew Robinson said that global developments would not affect operations in South Africa.
SiSebenza acquired the rights to the WeWork brand in South Africa in March 2023 as part of a franchise partnership, which gave it the exclusive right to operate WeWork’s existing locations in South Africa.
At the time of the acquisition, WeWork CEO and chairman Sandeep Mathrani said the partnership showed the global company’s “continued progress in pursuing asset-light growth where local capital and expertise” strengthened its business.
Migliore and Robinson said the focus for WeWork South Africa has been on expanding the brand in Ghana, Kenya, Mauritius, and Nigeria and growing its presence in South Africa.
“Our business’s core elements remain strong, and our primary objective is to achieve growth and sustainability,” said Migliore and Robinson.
From $47 billion to zero
WeWork was valued at $47 billion (R878.3 billion) in 2019, before its failed attempt to launch an initial public offering (IPO) and challenges in dealing with the Covid-19 pandemic’s impact on its co-working model.
Its charismatic co-founder, Adam Neumann, helped the company raise billions of dollars in funding and double revenue for several years after its debut in 2010.
However, while Neumann’s pitchman-like character had helped WeWork grow, his overly ambitious plans to extend the company into all aspects of people’s lives — with projects like WeSleep, WeSail, and WeBank, to name a few — eventually drew scepticism from investors.
The company wildly overestimated the size of the co-working office market, and within the weeks after its IPO filing, it became clear its business model was unsustainable.
Neumann voted to remove himself from the CEO position six weeks after the IPO filing and gave up majority control of his WeWork stock.
By then, WeWork’s valuation had been cut in half, and the IPO was cancelled.
Its biggest investor — SoftBank — has been unable to bring the company to profitability in the years since.
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