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WeWork Poised to Tap JPMorgan, Goldman for IPO as Fee Pool Grows

Sonali Basak, Gillian Tan and Sridhar Natarajan

(Bloomberg) -- WeWork Cos. is close to naming JPMorgan Chase & Co. and Goldman Sachs Group Inc. to lead its initial public offering next month, while sweetening the fees it pays banks, according to people with knowledge of the talks.

The office-sharing venture is expected to award JPMorgan the coveted first -- or lead left -- position in its syndicate of banks handling the deal, according to the people, who asked not to be identified because the negotiations are private. The terms and the hierarchy of the full banking group involved aren’t yet formalized and could change, the people said.

The fee pool for WeWork’s IPO -- which at a target of roughly $3.5 billion would be the year’s second-largest offering -- has inched higher in recent days as the company sets up a $6 billion debt-financing package that would fall into place only if the listing is a success. That unusual pairing of transactions is designed to diversify the funding sources of WeWork’s global expansion.

Earlier this week, WeWork was poised to carve out 2.5% to 3% of the total money raised via the IPO to pay underwriter fees. That portion under discussion has since climbed to 3.5%, according to the people -- though that, too, is in flux.

Representatives for WeWork, JPMorgan and Goldman Sachs declined to comment.

The New York-based venture, which rents furnished office space to companies and freelancers, has been looking for ways to grow, potentially investing in a broad array of businesses and properties. Its push for billions of dollars in additional financing is likely to prove more lucrative for WeWork’s bankers than just handling its stock sale, people with knowledge of the lending terms have said.

The firm is seeking to borrow $2 billion through a letter-of-credit facility and $4 billion with delayed-draw term loan, those people said. Banks will have to make good on their commitments only if at least $3 billion is raised in the IPO. The lenders would receive upfront fees equal to about 3% of their final commitment.

Uber Technologies Inc.’s $8.1 billion IPO in May ranks as 2019’s largest globally, followed by Avantor Inc.’s $2.9 billion listing that month.

--With assistance from Michelle F. Davis and Eric Newcomer.

To contact the reporters on this story: Sonali Basak in New York at sbasak7@bloomberg.net;Gillian Tan in New York at gtan129@bloomberg.net;Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, ;Alan Goldstein at agoldstein5@bloomberg.net, David Scheer

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