CVC makes £1.5bn approach for IWG’s Instant Group arm

The private equity sponsor of Six Nations Rugby has approached Britain’s largest serviced office provider about a £1.5bn deal that could trigger a wider split from the group.

CVC Capital Partners is understood to be among several buyout firms that have approached IWG, the FTSE-250 company formerly known as Regus, to acquire The Instant Group, its digital arm.

Banking sources said Tim Rodber, chief executive of The Instant Group, had been marketing the business to several private equity firms in recent weeks after a series of unsolicited approaches.

Wells Fargo is said to have been retained to advise IWG on the possible disposition.

If a deal were to materialize at a valuation of around £1.5bn, it would be higher than the current market value of IWG, which has seen its shares more than halve over the past 12 months.

That drop reflects investor concerns about office demand during an economic downturn and IWG’s larger-than-expected half-year loss of £70m, which was announced in August.

IWG competes with companies like WeWork, the company listed on the New York Stock Exchange.

Mark Dixon, the architect of IWG’s growth into what he describes as the world’s largest provider of hybrid workspaces, has been contemplating options to take the company private or break it up for years.

Its components include Signature, a premium city center brand, Regus and Basepoint, which operates in England and Wales.

In March, IWG announced that it would merge its digital and technology assets with The Instant Group as part of a transaction that saw the London-listed group pump £270m in cash into the combined entity.

In a business update last week, IWG said that “the integration of IWG’s digital assets with the Instant platform is progressing as planned and we are seeing EBITDA [earnings before interest, tax, depreciation and amortisation] the benefits of this are manifesting as expected.”

It was unclear on Monday how far along talks were with CVC and other private equity suitors for The Instant Group.

In total, IWG trades from more than 3,300 locations in 120 countries.

Mr. Dixon is said to believe the company is grossly undervalued by public market investors and has considered deals including a combination with a US-listed special purpose acquisition company for Worka, an app that helps IWG clients compare and book places to work. thousands of sites around the world.

On Monday morning, IWG shares were trading at around 137.3 pence, giving the company a market capitalization of £1.35bn.

Last year, IWG held tentative talks with CC Capital, a New York-based private equity firm, about selling part or all of the company.

In recent years, IWG has adopted a franchise model that has allowed it to sell assets in countries such as Japan and license its brands to new operators.

Mr. Dixon is the largest single shareholder in IWG and discussed the group’s privatization in 2019 when he held talks with Lone Star Funds, Starwood Capital, TDR Capital and Terra Firma Capital Partners.

Earlier that year, IWG rejected a takeover bid from Brookfield Asset Management and Onex, which valued the company at 280 pence a share.


Leave a Comment