CVC Capital swoops on the digital arm of office firm IWG

Private equity has swooped on the digital arm of office firm IWG.

CVC Capital, whose portfolio includes stakes in Six Nations Rugby and the RAC, is one of several suitors to approach the FTSE 250 firm about possibly buying The Instant Group (TIG), which advises businesses on their office space needs.

The division is understood to have a price tag of as much as £1.5billion, higher than IWG’s current market value following a slump in the share price as the slowdown in the global economy sparked fears over demand for office space.

These concerns were compounded in August when IWG reported a bigger than expected half-year loss of just over £70million and again earlier this month when it warned annual profits would be at the lower end of market forecasts.

The company’s shares are down 40 per cent so far this year. Concerns about the wider economy have also hit IWG’s US rival WeWork, which has seen its share price slump nearly 72 per cent since the start of 2022.

News of a possible deal for TIG comes after its boss Tim Rodber was marketing the business to several private equity firms over the last few weeks following several unsolicited approaches, according to Sky News which cited banking sources.

IWG shares soared 26.8 per cent, or 35.95p, to 169.95p following the report.

It is not known how advanced the talks with CVC are, but a deal to sell the division could precipitate a breakup of the entire group.

Splitting up IWG, previously known as Regus, has been considered in the past by its founder and billionaire chief executive Mark Dixon, who is also the firm’s largest shareholder with a 28.7 per cent stake.

Dixon previously discussed taking the firm private in 2019 and held talks with several private equity groups after rejecting an approach the year before from Canadian firms Brookfield Asset Management and Onex offering 280p per share, valuing the group at around £2.5billion.

IWG also held preliminary discussions last year with New York-based private equity group CC Capital regarding the sale of all or part of the business.

Dixon is thought to believe IWG is under-appreciated on the public market and that a deal could help to boost its value.

Aside from TIG, IWG’s brands include luxury workspace business Signature, Basepoint and flexible office space brand Central Working.

In total, the group operates in 120 countries at around 3,300 locations.