With WeWork shelving its IPO plans in the US indefinitely and co-founder Adam Neumann forced to step down by investors, its Indian affiliate WeWork India - owned by Bengaluru-based realty company Embassy group - faced several questions over its future and stake sale. Putting to rest all uncertainties, Chairman and Managing director, Embassy group, Jitendra Virwani clarified that being a 100 per cent subsidiary of Embassy, the IPO debacle had no bearing on the Indian entity as the US-based WeWork has no ownership in the Indian company.
"WeWork India has grown much faster than other WeWork entities," said Virwani. That is the reason why the company is looking to raise $200 million to fuel its expansion plan. Not long ago, the company was planning to raise $100 million from ICICI Ventures, but the talks failed owing to global events. While the global valuation of WeWork took a massive hit when the company hit the market, Virwani said, if WeWork had gone for IPO for $14 billion, India business would have still been worth $3 billion. Earlier, the Embassy was eyeing exit through the IPO for nearly $2.7 billion for 70 per cent of its stake, while WeWork was looking at a piece-meal deal of 51 per cent for just over $1 billion.
"WeWork was valued at $46 billion because we were discounting and selling since it was a new business," he added. The company is planning to raise $200 million once the dust settles. "We might opt for a structured debt to raise the capital since we have a strong cash flow," said Virwani. WeWork has received an investment of Rs 1,400 crore so far - Rs 900 crore from Embassy and Rs 500 crore in debt.
However, with the current turn of events, an exit is unlikely to happen in the near future. Virwani believes with a huge opportunity lying ahead, co-working business will have strong focus with or without WeWork IPO. "The past two years were all about building business and educating the market. The focus will now be on profitability," said Karan Virwani - CWeO - WeWork India. At a corporate level, the company hopes to achieve profitability by the middle of next year even as it has largely broken even at the unit level. With robust demand, the company said, it has closed over 10,000 desks in the last quarter, the highest ever for a three-month period.
Currently with a focus on top six metros, WeWork India has around 45,000 desks. It plans to expand those to 70,000 by the end of calendar year 2019. While the average commitment for desks has gone up to 20 months, long-term deals of three to six years are also coming by.