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WeWork sells control of China unit; says unit got $200 million in funding

·2 mins read
The outbreak of the coronavirus disease (COVID-19), in Beijing
The outbreak of the coronavirus disease (COVID-19), in Beijing

(Reuters) - U.S. office-sharing firm WeWork on Thursday said it will sell control of its China division to one of its investors - private equity firm Trustbridge Partners - as it steps back from a competitive market where it has suffered low-occupancy rates.

The deal effectively offloads the China unit away from the parent, which has faced fundraising issues since a failed attempt to go public in 2019.

WeWork said it will maintain a minority stake and "participating interest" in WeWork China and that it will receive an annual fee from the unit for use of the WeWork brand.

Concurrent with the deal, the division has received $200 million in funding from existing investors, WeWork said. Michael Jiang of Trustbridge Partners will serve as WeWork China's acting chief executive officer.

Trustbridge and Singapore state investor Temasek Holdings (Private) Ltd [TEM.UL] held talks with WeWork's Chinese unit over increasing their stakes and taking majority ownership, Reuters reported in January.

WeWork shelved its initial public offering in 2019 after investors grew wary of its losses, business model and corporate governance, leading to the resignation of co-founder and former chief executive officer Adam Neumann.

It has since undergone significant management change yet remains enmeshed in lawsuits over a $3 billion tender offer to existing shareholders.

Last month, the New York-based startup said it had almost halved its cash-burn rate from the end of last year and obtained a $1.1 billion commitment in new financing from Japan's SoftBank Group Corp <9984.T>.

SoftBank, meanwhile, has been steadily offloading assets to raise money after a spending spree late last decade. This month, it said it would sell chip designer Arm Ltd, purchased in 2016, to semiconductor giant Nvidia Corp <NVDA.O> for $40 billion.

(Reporting by Akanksha Rana in Bengaluru and Josh Horwitz in Shanghai; Editing by Aditya Soni and Christopher Cushing)