IWG and The Instant Group tap into hybrid work trend

Office rental company IWG said it would merge its digital assets with flexible workspace platform The Instant Group as office space providers benefit from the hybrid work trend, sending the London-listed firm's shares sharply higher.

IWG’s decision comes at a time when office landlords are slowly recovering as tenants reassess their options after the Covid-19 pandemic, including a shift to a permanent hybrid model, in which employees split work between home and office.

“We are merging our digital business with a company, which is serving the rest of the industry, to achieve a high growth rate and give more focus to the digital platform for the broader industry,” IWG CEO Mark Dixon said in an interview.

IWG’s share price rose as much as 15% to 267.5p, and the stock was among the top percentage gainers on the FSTE 250 index.

IWG’s digital assets offer services including platforms to book office spaces, while the London-headquartered The Instant Group caters to the flexible workspace market, with presence in 18 countries globally.

IWG will invest about £270m in buying the stakes of selling shareholders, while The Instant Group’s management will invest about £50m in the combined business, which is expected to be spun out by the end of 2023 through a listing in the US or UK.

The London-listed owner of the Spaces and Regus brands, IWG said it expected the deal to be earnings-accretive in the first full year of ownership.

Dixon said the consensus now is for a return to strong profitability in 2022.

The Switzerland-headquartered firm, which operates in more than 3,300 locations in 120 countries, posted a loss before tax from continuing operations of £259.4m for 2021, compared with a £613.3m loss the year before.

Dixon said that Ukraine and Russia account for only £7m each of the group’s overall annual revenue of nearly £2.5b. 

Reuters