1 Main Capital's Yaron Naymark on some general investor skepticism with $IWG.L thesis

Summary

• Yaron Naymark’s core update: IWG at ~$2B market cap trades at roughly 7x his ~$300M 2025 free-cash-flow estimate while its managed/franchise business — ~1,000 signings last year at a 15% management fee with landlords funding the capex — contributes “almost zero EBITDA” today. That fee stream is “about to go from zero… to hundreds of millions of EBITDA and free cash flow,” with “zero capital intensity, high margins, highly recurring revenue,” and the lag from signing through design, opening and filling “is finally starting to hit the income statement in 2025 and 2026.”
• The stock has gone nowhere while everything improved: EBITDA up ~70% (nearly 100% after deducting partner contributions) from two years ago, a few hundred million of FCF generated, debt paid down. Stacked catalysts: 2024 was the first USD-reporting year, 2025 the first US GAAP year (which helps facilitate an eventual US relisting), and the 1x net-debt/EBITDA buyback threshold is reached in 2025.
• CBRE’s purchase of Industrious is the validation trade: it bought the remaining stake at an $800M enterprise value for ~200 locations and $400-500M of sales; Naymark said Industrious, to his understanding, generated barely any EBITDA. That compares with IWG’s 4,000 locations and $4B of system-wide sales generating substantial EBITDA. Applying Industrious’s revenue or contribution multiple “you get multiples of our current stock price” — the deal “tells us that seven times free cash flow is way too cheap.”
• Naymark openly marks his own numbers down: out-year estimates have “come down substantially” because managed locations are suburban and smaller (~12-13k sq ft vs 20k traditional), yielding ~40% lower revenue per location than he first modeled. “If I used to think this could be a 20x… I now think it could be like a 5 to 10x. But we’re like 2 or 3 years closer” — and his confidence in the out-year numbers is higher than when he bought.
• Andrew Walker’s central challenge — no company he covers draws more management skepticism despite a 25% owner who is the industry’s “godfather” — draws a candid catalog of self-inflicted wounds. Yaron’s list: over-promising the speed to capital-light, floating the US relisting too early, overpaying for Instant at ~4x leverage while now insisting on 1x before buybacks (“a little bit hypocritical”), the Worka “double digits as far as the eye can see” reversal three months after the CMD, Dixon selling 35M shares into strength, and pulling occupancy disclosure.
• Naymark’s speculative Dixon endgame: based on conversations with people who know Mark, he “feels slighted” that public markets have not respected him and may have a “maybe 5, maybe 10 years” window to improve the stock. He either shepherds it much higher himself or sells to private equity at a premium, because he may not want to hand the keys to a Satya Nadella and be remembered as Steve Ballmer. The unresolved riddle: why he passed on WeWork when Walker recalled an outcome around $550M despite Walker’s argument that synergies could exceed $100M — though a second bite may come. Andrew said industry contacts believe post-bankruptcy WeWork is still “really not generating cash.”
• The math to the upside: ~$1.078B of 2028 EBITDA, roughly ~$1B after roughly $75M of partner contributions, ~$750M FCF plus an estimated ~$1B of net cash; 15x gets to about a £12 share versus roughly 160-170p at the time, and 20x isn’t crazy if fees dominate FCF. The kill scenario, per Yaron: a recession, or opening managed locations faster than they can fill them, degrading the partner experience until the market treats the fee stream as “a melting ice cube.” His tell: building-owner surveys — biggest position because “open-ended growth stories don’t normally come attached to a business that’s trading at seven times free cash flow.”

Deep dive

1. The setup: a 7x-FCF business with a fee stream currently contributing near-zero

• Naymark’s refresher: IWG is the largest flexible-office company in the world — 4,000 locations under Regus, Spaces, HQ and Signature, older and far larger than WeWork or Industrious — profitable and grown by reinvesting its own cash flow. The new model is capital-light: building owners fund the build-out, pay IWG an upfront fee plus “an ongoing management fee, which comes out to about 15% of revenues,” and IWG runs the space inside its network.
• The valuation gap as he frames it: ~$2B market cap, about $700M of debt, about $300M of 2025 free cash flow — “seven times my free cash flow number this year, very cheap on its own” — while the managed business generates “almost zero EBITDA” today and is “about to go from zero… to hundreds of millions of EBITDA and free cash flow” carrying “zero capital intensity, high margins, highly recurring revenue.”
• Why he was early rather than wrong: signings went ~400, then ~800, then ~1,000 last year against a base of 3,000-4,000 locations, but agreements take years to design, build, open and fill. “That lag is finally starting to hit the income statement in 2025 and 2026.”

2. Two flat years, stacked catalysts

• The frustration in one line: EBITDA nearly doubled coming out of COVID, hundreds of millions of FCF generated and debt paid down — “and the stock’s basically gone nowhere. So, flat stock price, lower net debt, significantly higher EBITDA, and we’re 2 years closer to these management fees.”
• The relisting track: a UK-listed company whose business is mostly American — 2024 was the first US-dollar reporting year, 2025 the first under US GAAP, which makes the lease accounting far easier to parse and helps facilitate an eventual NYSE/Nasdaq listing. Buybacks start at 1x net debt/EBITDA, a level reached this year.
• The industry stamp: CBRE bought the remaining stake in Industrious at an $800M enterprise value — ~200 locations and $400-500M of sales; Naymark said Industrious, to his understanding, “barely generated any EBITDA” — versus IWG’s 4,000 locations and $4B system-wide sales. To Naymark, that “tells us that seven times free cash flow is way too cheap.”

3. The billion-dollar target and the KKR rhyme

• Walker pins down “medium term”: never defined, but the investor-day charts run to 2028. Naymark says the $1B adjusted EBITDA is “very much in play” — owned and managed coworking have “significantly outperformed” his and internal expectations, while Worka (the Instant acquisition plus virtual office) has disappointed, but by less than the other two beat.
• The conversion math: minimal capex, very low interest, roughly $200M of taxes — call it mid-to-high $700Ms of free cash flow by 2028, with the company by then in a net cash position.
• The analogy he leans on: he owned KKR from 2018 to early 2024, where “eventually the market realizes that a secularly growing, capital-light, predictable, high-margin revenue stream is worth a high multiple.” If over half of IWG’s FCF is management fees by 2028, “there’s a shot you get a really big multiple on this stock.”

4. Are the building owners actually happy? The survey work

• Naymark has spoken to “dozens and dozens” of building owners and now runs surveys — the latest covered a little over 50 owners. On a 1-5 happiness scale, fours and fives are a majority, threes single-digit percent, ones and twos nearly absent. Walker’s pushback on selection bias gets a direct no: respondents volunteer negative feedback, and the results match his own conversations.
• The anecdote that carries it: owners who had leased space to a smaller coworking operator that couldn’t make rent handed the location to IWG, which “fills it at higher rents per foot and operates it very well” — converting empty space at rates likely above even a triple-net lease.

5. The secret sauce: funnel, five-minute callbacks, and 15-20% ancillary revenue

• Walker’s Chick-fil-A test — what does the brand actually add in suburban Kenner, Louisiana, with no existing sales base? Naymark’s answer starts with acquisition: Google, SEO, keyword buying at marketing scale, and conversion discipline — “if you put in your information, you will get a call within 5 minutes from someone” throwing promotions to sign you on the spot.
• Then pricing and design knowledge: comparable locations within 1, 3 and 5 miles inform how much open floor, private office and conference space to build and how to price each. And monetization — ~15% of center revenue from ancillary services: conference rooms by the hour, phone answering, mail handling. Walker recalls Dixon’s 2016 line that WeWork’s 3% ancillary mix could never work versus IWG’s 15-20%.
• The cost side compounds it: one of the largest office-furniture buyers globally (“behind the US government, they might be number two”), minimal staffing, cheap build-outs — producing after-tax returns on capital “in the 20s” on owned locations while “WeWork was earning in the negatives.”

6. The real bottleneck is landlord funding — and it’s easing

• Walker flags a Q3-call surprise: management called partners’ “ability to fund” the main obstacle, odd since the buildings already exist. Naymark’s numbers: conversions run $20-30/ft for easy retrofits up to $100-150/ft for premium space, on roughly 12-15,000 sq ft locations — real capex requiring sign-off from both equity holders and nervous lenders, who prefer 10-year guaranteed leases.
• The return logic for landlords: IWG’s own centers earn ~30% EBITDA margins after rent; for the building owner rent is zero, so the uplift is market rent plus that spread, less the 15% fee. Adoption is normalizing: “Five years ago you would pitch this to a landlord and they would look at you like you’re taking crazy pills. And now everyone kind of gets it.”
• Walker’s QSR-style suggestion — IWG lends half the conversion cost and recoups off franchise fees — lands on prepared ground: Naymark has explored a third-party credit facility secured by the blended management-fee stream. “That’s something that I think could be really interesting,” though not off IWG’s own balance sheet, and he’s unsure they’d do it.

7. RevPAR bleed and an honest numbers-down confession

• Managed RevPAR was $412 in Q3 versus a $315 run-rate on opened locations and ~$250 long-run — driven by suburban mix and by new centers opening at ~30% occupancy. Naymark thinks the decline is mostly through the system: down a little more in 2025, “maybe 2026 is flat-ish,” growing thereafter to sit only slightly below corporate locations.
• The confession, unprompted: his 2028-2030 numbers have “come down substantially.” He originally assumed ~$1M average center revenue and thus $150K of fee per location; suburban managed centers at 12-13,000 sq ft with lower rents mean “40-ish percent lower revenue per managed location,” and openings lag signings. The offset: “if I used to think this could be a 20x… I now think it could be like a 5 to 10x. But we’re like 2 or 3 years closer” — with more confidence, not less.

8. Why so much skepticism about a 25% owner? The self-inflicted wounds

• Walker’s puzzle: Dixon owns 25%, is the “godfather of the industry” who called the WeWork collapse — yet no company he covers draws more investor distrust, from the capital-allocation plan (“in my personal opinion, insane”) to the partner-contribution add-back in adjusted EBITDA.
• Naymark doesn’t defend the record: they over-promised the speed to capital-light, with a Hilton-style asset-sale strategy that depended too much on outside forces; floated the US relisting before they could execute; overpaid for Instant in 2022, taking leverage toward $1B and reported leverage to ~4x on depressed EBITDA — and now insist on 1x before buybacks, which is “a little bit hypocritical… it’s actually doing the opposite with equity holders.” The December ‘23 CMD said Worka would grow “double digits for as far as the eye can see”; in March they said Worka was not going to grow in 2024. And Dixon sold 35M shares — 10-15% of his stake — into strength.
• The counterweight: the business navigated dot-com, the GFC, Brexit, COVID, and WeWork’s “$20 billion of capital they were able to light on fire,” protected by SPV leases that let IWG hand back keys on any owned location. Crucially, the thesis no longer requires relying solely on management — surveys and conversations with third-party owners provide direct evidence about the managed agreements and partner experience, and once fees hit a GAAP income statement and convert to free cash flow that funds buybacks, “it’s just going to become much more tangible to investors.”
• On the pulled occupancy KPI — Walker: “where did my KPI go?… sometimes the ball’s getting hidden.” Naymark’s view is that revenue per location is the more useful metric, since day users and conference rooms tend to pay far higher rates and mix shifts would make occupancy misleading.

9. Dixon’s endgame and the WeWork riddle

• Naymark’s read from people around Dixon: “he feels slighted. He has a chip on his shoulder… the public markets are not giving him the respect that he deserves.” With what Naymark describes uncertainly as a maybe-five- or maybe-10-year window, “it’s hard for me to imagine he’s going to allow someone else to step in and become Satya Nadella and he’s going to be perceived as Steve Ballmer” — so Naymark thinks Dixon either drives the stock much higher himself, or “kind of has to sell it to private equity for a big premium.”
• The riddle Walker won’t drop: Walker recalled that WeWork went to creditors for roughly ~$550M, while Dixon has touted enormous synergies — so why doesn’t IWG own it? Naymark: credit-bidding lenders had the advantage, and after years of watching WeWork be overvalued, Dixon balked — but “sometimes you need to think about what it could be worth in your hands.” A WeWork-branded managed offering would also accelerate signings: pitch a Regus and owners ask “What are Spaces or Regus?”; pitch a WeWork and “a lot of them will just get it.”
• The second bite: Walker said his understanding was that Anant Goenka personally controls roughly 60% through his family office, is older than Mark and may be in his 70s; King Street and the bondholders need exit liquidity; and Walker’s industry contacts believe post-bankruptcy WeWork is “really not generating cash.” Naymark’s speculation: “Maybe that’s why they’re not buying back stock yet.”

10. The math to a multi-bagger — and what kills it

• The walk: $1.078B of 2028 EBITDA, roughly ~$1B after roughly $75M of partner contributions, roughly $200M of taxes → ~$750M FCF plus Naymark’s estimated roughly $1B of net cash. At 15x — “doesn’t sound crazy to me” with fees dominating — that’s about a £12 share versus roughly 160-170p at the time; 20x “is not crazy” either, and down the line a Hilton-style split could sell the owned business at 5-7x EBITDA. If public markets won’t pay, private-equity firms such as Brookfield or Blackstone could seek to extract that value.
• The failure mode, if they’re back in 18 months and it hasn’t worked: recession aside, “you’ve bitten off more than you could chew” — too many managed openings, unfilled, a degraded partner experience, and the market refusing a fee multiple because “they think it’s going to be a melting ice cube.”
• His falsification test is the survey: happiness scores flipping to twos and threes and owners becoming unlikely to give IWG another building “would be kind of scary for me.” Walker’s analogy — the French trader who asked who your neighbor would vote for: if owners grumble but keep opening locations, “your actions are kind of speaking louder than your words.”
• Why it’s his biggest position: he believes the entry valuation limits permanent impairment — “you could do well even if I’m wrong on the managed side,” though a recession could still cause a small loss — and “I don’t think you get diluted into oblivion here.” The rare asymmetry is that “open-ended growth stories don’t normally come attached to a business that’s trading at seven times free cash flow.” Hedged as ever: “I might change my mind tomorrow and sell my position.”