- Bank’s ties with WeWork include mortgages on CEO’s homes
- Bragging rights, hefty share of fees accompany IPO victory
When WeWork Cos.’ Adam Neumann sits down with investment bankers, he’s known to casually mention one of his longtime financial advisers: JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon.
Neumann and Dimon chat from time to time. A JPMorgan fund bought a stake in WeWork five years ago and the bank has since propelled the startup’s growth, providing more financing than any other lender. When Neumann wanted to use his stock to borrow money, the bank made it happen. When he added to his collection of luxury homes, JPMorgan was the lender, issuing almost $40 million in mortgages.
Now all of that attention is poised to pay off.
As WeWork prepares for an initial public offering next month, Dimon’s bank is helping Neumann’s company line up its most ambitious fundraising yet: a $6 billion package of debt financing that depends upon the IPO raising at least $3 billion. Behind the scenes, JPMorgan has indicated it will contribute $800 million of the loans, more than any other lender. The bank also is expected to take the coveted first — or lead left — position in WeWork’s syndicate for the IPO, giving the firm bragging rights and a hefty chunk of the fees.
“It’s a well-known company with explosive growth and big-name backers,” EquityZen analyst Adam Augusiak-Boro said in an interview. And “there certainly is this allure of large fees.”
The unorthodox pairing of debt and equity injections could pose unusual challenges for JPMorgan’s bankers, along with reputational damage if the IPO flops. WeWork achieved a $47 billion valuation in its latest private fundraising, a level that now looks like a stretch for its market debut, Augusiak-Boro said. But if all goes well, JPMorgan stands to profit handsomely over the long term.