INTERNATIONAL – WeWork is selling a majority stake in its China business as the co-working giant continues to pare down its expenses, the company said Wednesday.
Trustbridge Partners, an existing investor in WeWork’s China subsidiary, has invested an additional $200 million (R3.39 billion) and now owns more than half of the business, WeWork said. WeWork parent We Co. is giving up operating control of the unit, but will continue to get an annual service fee in exchange for the use of the WeWork brand and services, the company said.
WeWork opened its first Chinese location, in Shanghai, in 2016, and now operates more than 100 locations in 12 cities. Michael Jiang, an operating partner at Trustbridge, was named the acting chief executive officer of WeWork China, the company said in a statement.
For years, WeWork had eyed Asia as a source of significant growth. The company had created joint ventures to grow its business in Japan, Korea and China, and the China arm had raised $1 billion directly from investors such as SoftBank Group Corp., Hony Capital and Temasek Holdings Pte. WeWork also sued a Chinese rival, UrWork, over a too-similar name, and spent hundreds of millions acquiring other regional co-working companies such as Naked Hub in China and Spacemob in Singapore.
But after WeWork’s failed attempt at an initial public offering a year ago, the New York-based company has sought ways to cut expenses and pare back ventures outside of its core business in the US. That included selling off many of its acquisitions and shutting down projects like WeGrow, a private elementary school. The company has also tried franchise-like business agreements in the past, particularly for its locations in India.