- Jefferies reduced the estimated value of the investment in WeWork by $ 146 million on August 31, more than two weeks before the Shared Workspace Group abolished plans to go public.
- The Investment Bank's adjustment reflected a "significant discount due to uncertainty around the timing and pricing of We & # 39; s IPO," CEO Rich Handler and President Brian Friedman said in the earnings release.
- "As the facts of We become clearer, further adjustments may be made in future periods," they added.
- Look at the Markets Insiders website for more stories.
Jefferies reduced the estimated value of investments in WeWork by $ 1
The Investment Bank's adjustment reflected a "significant discount due to uncertainty around the timing and pricing of We & # 39; s IPO," said CEO Rich Handler and President Brian Friedman in Q3. release.
"As the facts of We become clearer, further adjustments may be made in future periods," Handler and Friedman added.
Jefferies has earned $ 31 million in cash on its $ 9 million investment in WeWork, retaining a 0.8% stake in the company, according to the earnings report. It cut the estimated value of this stock well before WeWork postponed its IPO plans on September 17, suggesting it was in doubt.
Prior to the flotation, investors emphasized WeWork's business model, valuation, complex structure, questionable management and behavior of co-founder and CEO Adam Neumann. Concerns meant WeWork looked at a public valuation below $ 20 billion – a sharp fall from the $ 47 billion private valuation it secured in January – which risked it collecting less than $ 3 billion needed to secure $ 6 billion in bank financing .
's IPO failure, WeWork has replaced CEO Adam Neumann with two co-CEOs and taken steps to rebuild the company's structure, improve governance and set up its heavy losses.
WeWork write-down sustained a pre-tax loss of $ 43 million in Jefferies & # 39; Commercial Banking Division, a major turnaround from pre-tax revenue of $ 219 million in the third quarter of 2018. Strong exhibits from investment banking and sales and trading segments failed to offset the damage, which means net income fell almost 75% to $ 48.5 million.