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Dumped WeWork co-founder could reap $500m from Spac deal

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Adam Neumann could reap almost $500m in cash from his holdings in WeWork and emerge with a stake in a public company, less than 18 months after the high-profile failure of its initial public offering cost him his job as chief executive. 

SoftBank is in advanced talks with WeWork’s co-founder and other shareholders to settle a bitter legal battle stemming from the Japanese group’s October 2019 rescue of the office group, which was needed to help it avert bankruptcy in the wake of the IPO’s collapse, people familiar with the negotiations said. 

Cleaning up the litigation brought by Neumann and a special committee of the group’s independent directors would clear the path for WeWork to be bought by a special purpose acquisition company, giving it the public listing it tried and failed to get in 2019. 

People familiar with the matter said BowX Acquisition, a blank cheque vehicle that raised $420m in an IPO in August, had approached SoftBank, WeWork’s largest shareholder, about a deal that could value WeWork at about $10bn.


$47bn


The price tag SoftBank put on WeWork in its last private funding round before the failed IPO

Talks between the two groups are continuing and a deal could be reached in the weeks ahead, although the negotiations could still fall apart. Resolving the legal fight with Neumann and others has been seen as critical to completing a merger with BowX, given the new public company must attract investors to its shares.

The mooted valuation would be well below the $47bn price tag SoftBank put on the company in its last private funding round before the failed IPO, which Neumann and his Wall Street bankers once hoped would match or eclipse that level. 

But it would represent an unexpected rebound in Neumann’s fortunes, an endorsement of a business model that appeared imperilled as the Covid-19 pandemic emptied offices and another indication of how the Spac boom has transformed capital markets. 

SoftBank is said to have approached Neumann and the special committee within the past two weeks with a proposal to settle their dispute over a $3bn tender offer that formed part of its October 2019 rescue. The Japanese group had pulled out of the agreement to buy the stock from Neumann and other investors, saying conditions in the deal had not been met.

The opposing sides were due to face off in court next week over the tender offer after an earlier trial gave the special committee and Neumann standing to bring their case against SoftBank.

The settlement under discussion would result in SoftBank paying $1.5bn — half the sum under dispute — to Neumann and other investors including Benchmark Capital. Neumann would receive about $480m for 25 per cent of his holdings, rather than double that for the 50 per cent he could have tendered. He would also retain three-quarters of his current holdings in the public company. 

WeWork has retrenched staff and exited more than 100 open and planned locations since its fortunes shifted drastically last year. Under the leadership of chief executive Sandeep Mathrani, the company has dramatically reduced costs, although it continues to lose money.

The talks are continuing and the exact sum Neumann and others receive could change.

BowX is led by Vivek Ranadivé and Murray Rode, two former executives of Tibco Software and backed by Bow Capital, the venture capital fund Ranadivé founded with support from the University of California. In listing documents last year, it said it intended to scout for telecoms, media and technology companies. 

Ranadivé also owns the Sacramento Kings basketball team.

The Wall Street Journal earlier reported on the settlement talks.



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South Korean video game group behind hit ‘PUBG’ aims for $5bn IPO

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The company behind global hit game PlayerUnknown’s Battlegrounds plans to raise up to Won5.6tn ($5bn) in an initial public offering that is expected to be South Korea’s largest ever.

Krafton said in a regulatory filing on Wednesday that it will sell more than 10m shares at Won458,000-Won557,000 each, with the top end of that range giving it a market capitalisation of Won28tn. The IPO price will be set on July 9 ahead of the company’s listing in Seoul on July 22.

The much-anticipated listing is likely to top that of Coupang, the leading South Korean ecommerce company that raised $4.6bn in New York in March.

Krafton, formerly known as Bluehole, was founded by Chang Byung-gyu in 2007. PUBG, a so-called battle royale game in which players fight to the death on a remote island, was released in 2017 and accounts for the bulk of Krafton’s revenues. The game has sold more than 75m copies across PC and consoles, while its mobile version has been downloaded more than 1bn times. Krafton’s operating profit more than doubled to Won774bn last year as sales jumped more than 50 per cent to Won1.67tn.

However, the company cited uncertainty in overseas expansion and domestic regulation as investment risks.

“Despite our successful experience in entering overseas markets, our past experience does not guarantee our future success given the different language, culture, custom and legal, regulatory environment,” Krafton said in its filing.

South Korea is on track for a record year for IPOs on huge retail investor interest. The benchmark Kospi index is trading near all-time highs, buoyed by ultra-low interest rates and the country’s strong economic recovery from Covid-19. Investment bankers have predicted that proceeds from IPOs will more than quintuple to at least Won25tn in 2021.

Other IPOs in the pipeline include LG Energy Solution, the world’s largest electric vehicle battery maker, which is expected to raise Won10tn-Won15tn in September. Hyundai Heavy Industries, a shipbuilder, is likely to raise $1bn-$1.5bn in August. Smaller deals include the IPOs of Kakao Pay and Kakao Bank, units of the country’s dominant messenger service provider.

“The Krafton IPO will be popular among investors, given investors’ growing interest in new growth areas such as EV batteries, games and online businesses,” said an investment banker close to the deal. “But the company is heavily reliant on just one game and it is uncertain how long the game’s popularity will last.”

Some analysts have raised concerns about Krafton’s high valuation based on its IPO pricing.

“Krafton’s valuation seems stretched, considering that its market cap will surpass NCSoft’s, although NCSoft is making more money than Krafton,” said a local analyst referring to one of the company’s competitors.

Krafton plans to use the IPO proceeds to develop new games, acquire other developers, enter markets including India and the Middle East and invest in technologies such as artificial intelligence.

After the IPO, Chang will hold a 14 per cent stake, followed by Chinese internet group Tencent with 13.2 per cent, according to company filings.

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Made.com valued at £775m in London IPO

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Shares in Made.com fell 8 per cent despite the company pricing them at the bottom of their range in its initial public offering on Wednesday, giving the online furniture retailer a market capitalisation of £775m.

The listing follows the recent debuts in London of online greeting card group Moonpig and vintners Virgin Wines, which have accelerated sales thanks to stay-at-home consumers buying online during the coronavirus pandemic. Both those groups’ shares remain well ahead of their IPO prices.

Deliveroo’s £7.5bn IPO was branded one of the worst In London’s history, however, after its shares — already priced at the bottom end of the range — fell as much as 30 per cent in initial dealings. They remain more than a third below their IPO price.

“It’s a bit disappointing,” said one banker not involved in the Made.com IPO, adding that the 200p a share pricing was “some way below the levels that had been talked about”.

Valuations of up to £1bn had been mooted in the run-up to the listing.

“It’s got a large addressable market and a lot of share to go for, but historically it has wrestled with achieving profitability and scale in the UK market and it has gone ahead and pushed into international markets despite that,” the banker added.

Made.com sold 50m new shares in the IPO, raising £100m, while existing investors including co-founder Ning Li and Brent Hoberman sold 46.9m shares. A further 14.5m shares could be made available as part of the overallotment option. If exercised, that would increase the number of shares to 111.5m and 29 per cent of the issued share capital.

The shares traded conditionally in London on Wednesday, while full dealings will begin on Monday.

The homewares group aims to quadruple annual sales to £1.2bn by the end of 2025. The company has said it plans to invest proceeds from the IPO in marketing and supply chain improvements aimed at reducing the time between customer orders being placed and goods being delivered.

“The IPO is an exciting milestone for Made,” said chief executive Philippe Chainieux. “A listing in London, where the business was founded, will enable us to accelerate our growth.”

Made.com generated £315m in sales last year. The group, founded by entrepreneurs Ning and Hoberman in 2010, sells to about 1.2m active customers in the UK, Germany, Switzerland, Austria, France, Belgium, Spain and the Netherlands and plans to expand beyond Europe.

After admission, growth-focused investors Level Equity and Partech will be the largest investors in the group, holding 14 and 11 per cent respectively, followed by companies linked to Ning with 8.8 per cent.

Fund management groups Majedie, Axa and NFU Mutual will also be top-10 shareholders, while a vehicle controlled by Hoberman will own 5.5 per cent.

The float is the latest in an increasingly active IPO scene for so-called digitally native businesses.

Victoria Plumbing is due to float on London’s junior market early next week, with pricing details expected on Thursday, while shares in German online fashion retailer About You began trading in Frankfurt on Wednesday and Berlin-based online optician Mister Spex announced its intention to float on Monday.



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Hong Kong tycoon Richard Li’s FWD to raise up to $3bn in US IPO

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FWD, the Asian insurer founded by the son of Hong Kong tycoon Li Ka-shing, has filed for a US initial public offering in what would be one of the year’s biggest listings.

The company launched by Richard Li in 2013 said on Thursday the number of American depositary shares to be offered and the price range for the IPO had not yet been determined and the timing of the listing was subject to regulatory approval. But the company could seek $2-3bn from the share sale, according to people familiar with the situation.

FWD has expanded aggressively across Asia, rapidly rolling out a network across 10 countries including Japan, the Philippines, Vietnam, Singapore, Malaysia, Thailand and Cambodia.

The insurer has almost 10m customers, more than $63bn in assets and about 6,100 employees as well as 33,000 agents.

Richard Harris, a fund manager at Hong Kong-based Port Shelter Investment Management, said FWD “has made enormous gains [in market share] because it’s got a lot of firepower behind it”.

As with Li Ka-shing’s Cheung Kong conglomerate, FWD “takes a strategic view on industries and invests very heavily in them”, Harris said.

He added that it was “interesting” that the insurer had chosen to list in New York over Hong Kong, but US investors “will be interested [in FWD] and there does seem to be a slight thawing with the view towards Chinese companies — and this will be recognised in New York as a Chinese company”.

Li started FWD with the $1.2bn acquisition of ING’s pension and insurance businesses in Thailand, Hong Kong and Macau. The expansion strategy of Huynh Thanh Phong, FWD’s chief executive, has focused on pairing moves into new Asian markets with the use of technology to reduce the paperwork and complexity common to the industry in the region.

The group has swallowed up competitors as rival financial groups have retreated from the region, including MetLife’s Hong Kong business and the insurance business of Thailand’s Siam Commercial bank, the industry’s largest-ever takeover in south-east Asia.

“[SCB was] the prize asset that everybody wanted to go after,” Phong told the Financial Times in an interview this year. FWD eventually acquired SCB for about Bt93bn ($3bn) in 2019, giving it a 36 per cent market share in Thailand in bancassurance terms, bigger than the next three groups combined.

FWD has submitted a confidential filing for the IPO to the US Securities and Exchange Commission. That will allow it to submit other documents confidentially to the SEC before filing a prospectus publicly.



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