WeWork Rival IWG Considers Sale of Canadian Operations

(Bloomberg) -- IWG Plc, the biggest operator of serviced offices globally, is exploring a sale of its Canadian business, according to a person with knowledge of the matter.

The company is in talks with investment banks, according to the person, who asked not to be named because the discussions are private. A sale would include IWG’s existing Canadian operations, including its Regus and Spaces brands, as well as rights to open new locations under those brands, the person said. IWG would keep an ongoing cut of the revenue, according to the person.

Switzerland-based IWG said last month that it is selling operations in various regions and signing franchise agreements -- similar to the hotel industry -- to capitalize on the boom in demand for flexible offices. IWG, which is listed in the U.K. with a 3.7 billion pound ($4.6 billion) valuation, hasn’t yet decided on a valuation of the Canadian business, and the plans are subject to change, the person said.

In a similar transaction, TKP Corp. agreed to buy IWG’s Japanese business in April, paying 320 million pounds for about 130 flexible co-working centers and the rights to use the Regus, Spaces and OpenOffice brands in the country. The success of the sale, in which IWG also will get a share of revenues, has encouraged the firm to explore more regional deals globally.

A spokesman for IWG declined to comment.

Growing demand for furnished offices with flexible leases has helped fuel the rapid growth of competitors such as WeWork, which is planning an initial public offering of stock. IWG has seen its global business grow in the past few years. It acquired the hip, millennial-friendly Spaces brand in 2014.

In Canada, IWG has 3 million square feet across 133 locations, in cities such as Toronto, Vancouver and Montreal.

Last month, Sky News reported that IWG was in talks with banks to spin off the firm’s U.S. business into a separately listed company in New York.

--With assistance from Jack Sidders.

To contact the reporter on this story: Natalie Wong in Toronto at nwong133@bloomberg.net

To contact the editors responsible for this story: Rob Urban at robprag@bloomberg.net, Christine Maurus

©2019 Bloomberg L.P.