There are indications that compared to the Vision Fund, the money of Softbank in WeWork is nothing short of awkward.
文/陈凯乐
One story that is widely circulated in the venture capital circle is that in 2017, Sun Zheng asked WeWork founder Neumann. “You think that in a battle, smart people and madmen, who will win?” Neumann Telling Sun Zhengyi, “Maniac.” Later, Sun Zhengyi invested $4.4 billion in WeWork.
Two years later, Sun Zhengyi still wants to continue to inject capital into WeWork. But time shifts are easy, and WeWork seems to be less willing to accept the money. According to Zinc Finance, after the parent company We Company gave up the IPO, WeWork, which was extremely short of money, received two olive branches: a new round of equity financing negotiations offered by Softbank, and billions of dollars of debt provided by JP Morgan Chase. Financing agreement.
There are indications that the choice of WeWork’s financing plan is not only about itself, but also the fate of Softbank and Sun Justice.
Extreme anemia
WeWork, known as the “two-owner of the office building”, is extremely anemic.
The media was informed that WeWork’s funds at hand may be exhausted in November. If there is no capital injection before November, there will be a risk of shortage of funds. But the fate is that at this time almost no one is willing to be a receiver.
According to media reports, the deal on WeWork in the private over-the-counter market has almost stopped. Jitu Virwani, a major shareholder of WeWork India, also told the media that the $100 million negotiations between WeWork and the local Indian bank ICICI Bank have broken down.
People outside the city are afraid to avoid it, and people in the city have fled. Goldman Sachs CFO Stephen Scherr confirmed at the earnings conference that Goldman Sachs has reduced its shareholding in WeWork by $80 million, far below JPMorgan Chase’s expectations.
Behind all of this, it reflects the dilemma of WeWork’s market value collapse. After the withdrawal of the IPO, WeWork’s market value also fell from the original $ 10 billion. According to Zinc Finance, as of the date of publication, WeWork has a market value of only $7 billion. Compared to the original $47 billion, there is only a fraction left.
In other words, if there is no financing coming in, Waiting for WeWork can only be bankruptcy liquidation. But at the crucial moment, Softbank and Morgan gave solutions.
According to Zinc Finance, Softbank proposed to invest WeWork billions of dollars through a combination of new stocks and bonds. And asked to further marginalize the company’s founder Adam Newman. It is worth mentioning that Softbank already holds a 29% stake in WeWork, while JP Morgan Chase has thrown about 5The $100 million financing package includes at least $2 billion in unsecured in-kind payments, but the coupon is rarely as high as 15%. Zinc Finance learned that this is almost twice the yield that WeWork paid when it first issued bonds last year.
In other words, Softbank wants control, and Goldman Sachs cares about money.
Soft silver under the tiger’s difficulty
For Sun Zhengyi, investing in WeWork is more like a gamble, but it is different from the result of investing in Alibaba. Now the whole softbank needs to be the one-person behavior of Sun Zhengyi.
According to Zinc Finance, since the acquisition of WeWork in 2017, Sun Zheng has been overweighting the latter. So far, Softbank has invested more than US$10 billion in WeWork and already holds 29% of the latter. Especially after investing $2 billion in WeWork this year, the market value of the latter has been rushed to $47 billion.
But while Sun Zhengyi triumphed, the insiders of Softbank have long been worried. According to foreign media, Softbank’s internal executives Nikesh Arora and Alok Sama suggested that WeWork should not be worth more than 8 billion when Sun Zheng invested in WeWork. The dollar, once it exceeds Softbank, should be withdrawn. As Sun Zhengyi continued to invest more, the two executives also left Softbank.
Sun’s gamble also triggered a tense relationship between Softbank and investors. Zinc Finance learned that the Vision Fund, together with the Saudi Arabian Public Investment Fund and Mubadala Investment Company, abandoned the $16 billion investment in WeWork initiated by Sun Justice in the early 19th year, and Softbank subsequently reduced the investment amount to 20 One hundred million U.S. dollars.
However, the failure of WeWorkIPO eventually led to the crisis of Softbank. According to foreign media reports, on October 14, Softbank’s Tokyo stock fell 7.3%, and the market value of Softbank lost $22 billion in two weeks.
For the soft silver that has been deeply mired in this time, letting go of the tens of billions of dollars in the previous period means that Softbank and Sun Justice are not willing to see it. Sun Zheng obviously apparently refused to admit his failure. In an interview with the media, he said, “Compared with the previous one, the small crisis that WeWork has appeared is only a small child’s game.”
The stop loss is impossible to stop loss. WeWork dug the pit and Softbank can only be filled later.
burning the future vision fund
The other reason why Softbank has reached out to WeWork is the vision fund behind it.
A variety of indications show that compared to the Vision Fund, Softbank’s money in WeWork is nothing short of awkward.
Zinc Finance understands that in October 2016, Sun Justice, which focused on the global market, established the Vision Fund. Then in 2017 10Month and Vision Fund received $93 billion from the United Arab Emirates, Apple, Foxconn and Softbank itself. In 2018, the vision has also received 5 billion yuan from Softbank Group, Saudi Arabian Sovereign Wealth Fund and UAE Mubadala Investment Fund. Dollar investment.
The grand justice of holding a lot of cash has started the journey of money. He has publicly stated that he plans to raise a new $100 billion fund every two or three years, with an annual investment of about $50 billion. Uber, Didi, OYO, Boston Dynamics, and WeWork all managed to get the vision fund investment. According to Zin Finance, as of October 2019, the Vision Fund has invested in 82 technology companies.
The savvy Sun Justice played the abacus very loudly. According to foreign media reports, because of the $100 billion in hand, only the 0.7%–1.3% service fee charged by Softbank to investors was negotiated. In this way, the Vision Fund can easily earn $1 billion a year.
However, the final result is quite different from what Sun Zheng expected. The Vision Fund invests in several important investments that point to one word: burning money.
Zinc Finance has learned that Uber has fallen 30% of its market value since its offering in May this year. The second quarter of 2019 reported that Uber’s losses had reached $5 billion, refreshing the previous record of burning money;
WeWork’s prospectus shows that the company’s total loss was $3.3 billion in the three years from 2016 to 2018. In the first half of 2019, WeWork’s net loss reached a rare $904 million;
The Boston Power, which had been highly anticipated by Softbank, was sold to Softbank by Google because of the serious losses. The current profit is not clear.
In June 2019, Softbank official data revealed that the vision fund had received a 62% return after it had invested a total of $64.2 billion. However, according to Zinc Finance, most of the projects invested by the Vision Fund have not realized revenue. After the investment in the shared field has not seen obvious gains, LP has gradually lost confidence in the vision fund and even affected the recruitment of Vision 2 funds.
According to foreign media news, the target size of 1080 billion Vision 2 Fund, the company that has confirmed the commitment to fund only gave a commitment of 38 billion US dollars, and the remaining 70 billion US dollars gap is still not available.
In addition, WeWork’s thunder has also triggered investment institutions’ focus on the vision fund.New review. Informed sources told the media that Goldman Sachs, a well-known investment institution, has squeezed its loan position on the Vision Fund and sought to turn it around. Zinc Finance has learned that Goldman has been in contact with a number of financial institutions in the past few months, and in order to sell the vision of secured securities, Goldman Sachs has cut the price and split the securities to a minimum of $50 million. , ready to cash out.
Brain or disaster
Sun Zheng’s apparently did not anticipate that the $100 billion in funds would now collectively trigger a thunder. In an interview with foreign media, he said, “There is still a long way to go before the results, which makes me feel ashamed and impatient.”
However, when Sun Justice and Softbank wiped WeWork, the latter apparently did not intend to stop. According to Zinc Finance, WeWork prefers a $5 billion financing plan led by JPMorgan Chase to sell its equity to Softbank. In this regard, Bloomberg industry research analyst Arnold Kakuda said in a report, “Even if the bond yield exceeds 10%, there may be no appetite for the burning business facing other unfavorable factors.”
In this way, WeWork brings to Softbank, it is not just a pain, it may even turn into a disaster.
WeWork’s choice is not only about itself, but about the fate of Sun Justice and Soft Scene. It is worth mentioning that if WeWork really chose JPMorgan Chase for “not knowing the current affairs”, Sun Zhengyi’s joint board of directors and the CEO of the Palace will not know whether it will be staged again.