WeWork To Provide Office Space To Fellow Softbank-Backed Startup In New York

Co-working space startup WeWork has signed an agreement to provide Gympass with office space for 250 employees in Manhattan, Reuters reported Sunday.

What Happened

The agreement, which is valid for three years, will see Gympass' capacity in the city triple, according to Reuters.

Much like WeWork, the New York-based corporate wellness company, with roots in Brazil, is also backed by Softbank Group Corp. SFTBY.

This could be the latest attempt by the Japanese investment giant to help the troubled co-working space startup stay afloat. While Softbank doesn't have a controlling stake in Gympass, it encourages its portfolio companies to collaborate, sources familiar with the deal told Reuters.

Why It Matters

Softbank's WeWork investment and subsequent acquisition have been a cause for the investment bank's worst quarterly performance in history, and embarrassment for its chairman Masayoshi Son, who said he regretted his bad judgment in the case.

The Tokyo-based holding company acquired an 80% stake in WeWork in a rescue deal that saw the company's controversial founder Adam Neumann walk away with nearly $1.7 billion in a severance package after his initial public offering bid was withdrawn dramatically.

WeWork, led by Softbank chief operating officer Marcelo Claure, is looking to get 1 million subscribers by early 2021, one of the sources told Reuters. It currently has about 650,000.

Price Action

Softbank's shares traded 3.29% lower at 51.5 in Tokyo at press time on Monday. The shares closed 1.45% lower at $21.45 in the otc market on Friday.