Serviced office company IWG is considering splitting up its business to boost its valuation, which has fallen during the pandemic and is less than half that of smaller rival WeWork.
The company revealed it was undertaking a review of its structure and was looking at the commercial rationale for spinning off IWG’s digital and technology business from its office leasing arm.
Michael Donnelly, an analyst at Investec, said the review would help investors answer the question of where value lay in the company.
That question has become particularly vexed in the past few months thanks to the listing, via a special purpose acquisition vehicle, of rival flexible office company WeWork.
WeWork has fewer desks in fewer locations to lease out than IWG and has been consistently lossmaking. But it went public on the New York Stock Exchange last month at a valuation of $9bn, more than twice the current IWG’s market capitalisation of just over £3bn.
The discrepancy between the valuations of the two companies is “extraordinary”, said Donnelly. “It doesn’t mean one’s right and one’s wrong. They might both be wrong.”
IWG’s review will look at the value of each individual part of the sprawling business, including its traditional office leasing arm, a growing franchising operation and the proprietary technology developed by the company.
“All management teams of all businesses want to present their business in such a way that people can see value in it,” said Donnelly.
IWG said that September had been its strongest month of 2021 to date, as more people returned to the office and revenues crept up. Occupancy levels at the company’s 3,308 global offices were above 70 per cent during the third quarter of the year.
Revenues from open centres climbed modestly, from £536m in the third quarter of 2020 to £545m in the same period this year.
IWG shares were flat on Tuesday morning at 308p, and remain about a third down on their pre-pandemic level.
IWG considers splitting business to boost value
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