Co-working provider WeWork has sold a majority stake in its China business to existing shareholder Trustbridge Partners for $200 million. WeWork will license its name and services for a fee, and is giving up operating control, WSJ first reported.
- Worth Noting: The first WeWork space opened in Shanghai in 2016, and today there are more than 100 sites across 12 cities, with over 65,000 members in total. Tenants include large Chinese tech businesses such as Alibaba and Tencent.
- How the mighty have fallen: WeWork formed a joint venture with Chinese investment company Hony Capital, Japan’s SoftBank Group, and other investors to expand in the country in 2017. A year after its launch, the China entity alone was valued at a whopping $5 billion in a funding round that included Temasek and the Vision Fund. WeWork held a 59% stake in the venture as of last year.
- Dig Deeper: Franchise-type arrangements like the new one in China brings WeWork a smaller share of a location’s revenues, but it also means the company reduces its exposure to expensive long-term leases. The company already has a similar arrangement in India. WeWork said it will retain a minority stake in WeWork China, and it will also keep a board seat. [WSJ+CNBC}