Presented by the Financial Times

Hi John, here's what you need to know for October 15th in 3:12 minutes.

⏳ Keep it brief

• WeWork’s biggest investor, SoftBank, is considering plans to rescue the company, which risks running out of cash after its failed initial public offering
• French oil giant Total announced a $600 million investment in an Indian gas distribution firm – continuing the trend of oil companies expanding into alternative energy sources

Dispirited Away

What’s Going On Here?

With WeWork at risk of running out of cash next month, Japanese conglomerate SoftBank is considering stepping in to save the co-working company – and its own investment.

What Does This Mean?

The We Company, WeWork’s parent company, had expected to raise upwards of $3 billion at an initial public offering (IPO), and twice that with the extra borrowing power it’d have. But when public investors passed, WeWork suddenly found itself very short on cash. 

That’s led WeWork to look elsewhere. It could take out more loans, but that’d be costly: current bond-holders are effectively demanding 11% in interest, so new debt’s unlikely to be cheaper. Or it could turn again to its biggest shareholder. SoftBank owns about a third of WeWork through its $100 billion Vision Fund, and it’s proposed a plan to take an even bigger stake. That’d give it control of WeWork, which it could then try to turn around before eventually selling for a profit.

Why Should I Care?

For markets: Between a rock and a hard place.
If WeWork goes under, SoftBank could lose over $10 billion. That’d sting at the best of times, let alone after a $600 million loss from an Uber investment and a 28% first-day drop in the stock of its high-profile venture, Vir Biotechnology, last week. But a successful WeWork turnaround could be just what the doctor ordered. Perhaps that’s why WeWork’s bond-holders – more confident about its future – drove its bond prices up on Monday.

The bigger picture: Pivot! Pivoooooot!
Funds like SoftBank’s Vision Fund are “venture capital” (VC): they invest in relatively early-stage companies, taking on the risk they’ll fail in the hope of big profits if they succeed. But it’s rare a VC firm steps in to take control of a business. That’s normally reserved for private equity funds, which invest in more mature companies, streamline their costs, and sell them on. SoftBank’s decision to turn the Vision Fund from the former to the latter, then, may raise some eyebrows…