Co-working Giant WeWork Weighing Possible Sale of Bonds in Israel

The U.S. company has met with local investors for a sale that could reach the hundreds of millions of dollars

Adam Neumann, CEO of WeWork, speaks to guests during the TechCrunch Disrupt event in Manhattan, in New York City, NY, U.S. May 15, 2017
EDUARDO MUNOZ/REUTERS

WeWork, the giant U.S. co-working company co-founded by Israeli Adam Neumann, is weighing the possibility of selling bonds in Israel in an issue that could be worth hundreds of millions of dollars, sources said over the weekend.

WeWork executives, joined by executives from Discount Capital – which will underwrite the issue if it happens – met last week with institutional investors in Israel to sound out their interest in the prospective bond issue.

Among those they met were insurance companies Phoenix and Menorah, investment house Meitav Dash and a group of mutual funds.

WeWork has reportedly not made any final decision on whether to go through with the bond sale, nor has it decided how much it would raise or under what terms.

The Discount Capital connection surfaced a month ago when Neumann was invited to speak at a client conference in Tel Aviv sponsored by Israel Discount Bank, the underwriter’s parent company.

Neuman founded We Work seven years ago with his American partner Miguel McKelvey and today it counts facilities in the United States and some 20 other countries. In Israel, it has six locations and plans a seventh. Worldwide, it employs 15,000 people in 150 facilities.

Earlier this year, the Japanese investor Softbank – and Softbank’s Saudi-backed technology fund – agreed to invest $4.4 billion in the company in a deal that valued WeWork at $20 billion. That makes it among the most valuable startup companies in the world, on a par with Airbnb.

Before that, WeWork had raised a combined $1.7 billion from the U.S. investment banks J.P. Morgan and Goldman Sachs, the U.S. venture capital fund Benchmark and the Israeli VC Aleph.

Scores of U.S. real estate companies have raised about 12 billion shekels ($3.4 billion) on the Tel Aviv Stock Exchange, taking advantage of low local interest rates. WeWork is different from the others in that it is usually looked on as technology company because its shared-office-space strategy relies in innovative technology and many of its customers are startups.

Though WeWork is believed to be generating revenues of more than $1 billion annually, its rapid expansion means it hasn’t been generating profits and it continues to raise capital.