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Investing.com -- RBC Capital Markets in a note dated Friday said the global shift toward hybrid work is putting International Workplace Group Plc (LON:IWG) (IWG) in a strong position to deliver large shareholder payouts over the coming years.
The brokerage noted that IWG, which operates workspace brands including Regus, is expected to benefit from the capital-light nature of its future growth strategy.
Expansion will be led by its Managed & Franchised segment, which generates recurring fee income with less capital outlay compared with company-owned locations.
RBC said this shift, alongside falling depreciation costs and a lower tax rate, should accelerate earnings growth.
It forecasts a compound annual growth rate of 8% for adjusted EBITDA between 2025 and 2030, stepping up to 20% at the operating profit level and 26% at the earnings per share line.
The report projected that IWG could generate about $1.6 billion in free cash flow over the next five years, equal to roughly 58% of its market capitalization.
RBC said the majority of this cash is likely to be returned to shareholders through dividends and buybacks.
In 2025 alone, IWG is expected to produce £126 million in free cash flow after dividends, supported by a $130 million share repurchase program scheduled to complete by year-end.
By 2030, RBC estimated that more than 50% of the current market cap could be returned to investors.
IWG’s current buyback and dividend program underscores its transition into what RBC called “something of a cash machine,” contrasting with earlier years when the company faced volatile profits and heavy capital investment.
RBC raised its price target for IWG shares to 260p from 215p, maintaining an "outperform" rating.
The brokerage said the positive backdrop includes sustained demand for flexible offices driven by hybrid work adoption and ongoing economic uncertainty, both of which encourage companies to favor short-term, flexible space solutions.