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WeWork’s China Subsidiary Is Raising $500 Million

The co-working startup’s China business is now valued at $5 billion.

Coffee dispensers sit on a counter in a kitchen area at the Embarcadero WeWork Cos Inc. offices in San Francisco, California, U.S., on Thursday, Oct. 19, 2017. WeWork has focused its attention on Asia since 2016 with the opening of its first facility in Shanghai amid booming demand for flexible work spaces.
Coffee dispensers sit on a counter in a kitchen area at the Embarcadero WeWork Cos Inc. offices in San Francisco, California, U.S., on Thursday, Oct. 19, 2017. WeWork has focused its attention on Asia since 2016 with the opening of its first facility in Shanghai amid booming demand for flexible work spaces. Photographer: Mike Short/Bloomberg

WeWork Cos.’s China-focused subsidiary is raising $500 million from Asian investors, the co-working giant said Thursday.

The round values the business at $5 billion, according to people familiar with the transaction. A year ago, WeWork created three separate entities to expand their shared office space business in Asia—one for China, another for Japan and a third for South Korea and Southeast Asia. SoftBank Group Corp. invested in all three ventures, and Hony Capital also took a minority stake in the China business.

The China group’s most recent funding is led by Trustbridge Partners and includes investments from SoftBank, SoftBank’s Vision Fund, Temasek Holdings Pte. and Hony Capital, WeWork said.

WeWork, which offers flexible leases to small and large companies and also designs offices for companies, has been expanding rapidly in Asia. That’s in part thanks to the deep pockets of SoftBank, which invested $4.4 billion in the company last year, split across WeWork and its Asia-focused subsidiaries. That round valued the company at $20 billion, though a SoftBank executive recently said the company is raising funds at a $35 billion valuation. WeWork said it expects its customers in China to double to 40,000 by the end of the year.

WeWork said the round of funding for its China arm could expand to as much as $700 million before it closes. The other two subsidiaries have not sought more outside funds, the company said, but might in the future.