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SoftBank is preparing to an invest a massive amount of its landmark Vision Fund on the success of one company, WeWork, in a deal that would essentially bet the farm on the New York-based real estate giant.
The Vision Fund is a $100 billion vehicle but could invest as much as $20 billion into the deal, taking a majority stake in the company, according to The Wall Street Journal. In a fund that has been defined by massive, sometimes-ridiculed injections of cash into startups, this deal would reflect a new level of boldness yet by the Middle Eastern-backed fund.
The talks in New York, confirmed by a source familiar with the matter, have been described to Recode as tense.
It would also raise questions about the future of WeWork, given that the Vision Fund would hold a majority stake, the source said. Would SoftBank eventually look to acquire full ownership of the company? Or perhaps spin it back out and list it in an IPO after all?
Given SoftBank’s previous $4.4 billion investment into WeWork, about one-quarter of the fund’s success would depend on the success of one company. That amount of concentration might scare off traditional venture investors. So this appears to be yet another way in which SoftBank is throwing convention to the wind.
WeWork has pitched its core office-rental business as a tech company and not a real estate company. Investors — many of them from overseas and not the traditional Silicon Valley set — have bought into that and valued the company at more than $20 billion on private markets. Some investors have criticized that valuation as overly generous.
WeWork and SoftBank declined to comment.