In the backdrop of growing demand for flexible work spaces in India, big players in this sector are taking initial public offering (IPO) route to raise capital to fuel business growth. In August this year, Smartworks Coworking Spaces, one of the leading managed office space platform in India, filed its IPO document to list its shares on the domestic exchanges. Now, venture capital firm WestBridge Capital-backed workplace solutions company IndiQube Spaces has filed the draft red herring prospectus (DRHP) with capital markets regulator SEBI to raise up to ₹850 crore through an initial public offering (IPO). As of now, only two companies - Awfis and EFC (I) Ltd – from this sector are listed on the domestic bourses.

The issue of the Bengaluru based company comprises of a fresh issue of equity shares worth up to ₹750 crore and an offer for sale (OFS) of shares up to ₹100 crore by the promoter selling shareholders – Rishi Das and Meghna Agarwal, as per the IPO document filed with the regulator. Rishi Das is the chairman, executive director, and CEO of the company and Meghna Agarwal is the COO and executive director.

The company intends to use capital raised from fresh equities for establishing new centers, repayment of loans, and meet general corporate purposes. Out of ₹750 crore, the company proposes to utilise ₹462.6 crore for funding capital expenditure towards establishment of new centers; ₹100 crore to repay certain borrowings availed by the company; and remaining capital to meet general corporate purposes.

Established in 2015, IndiQube manages a portfolio of 103 centers across 13 cities, covering 7.76 million square feet of area under management (AUM) in super built-up area with a total seating capacity of 172,451 as of June 30, 2024. It has a balanced portfolio of global capability centers (GCCs) and Indian enterprises as part of its clientele. IndiQube’s clients include GCCs, Indian corporates, unicorns as well as start-ups across sectors like Myntra, upGrad, Zerodha, No Broker, Redbus, Juspay, Perfios, Moglix, Ninjacart, Siemens, Narayana Health to name a few.

On the financial front, it reported a total income of ₹867.6 crore in fiscal 2024 as against ₹601.2 crore in the previous year. On the operating front, EBITDA was ₹263.4 crore, while for Q1 FY25 it stood at ₹153 crore.

As per the DRHP, IndiQube Grow is the company’s core offering which represents a comprehensive workplace solution, for plug and play workspaces incorporating interiors, technology, facility management and value-added services. It has also developed four additional verticals, namely IndiQube Bespoke, IndiQube One, MiQube and IndiQube Cornerstone to service specialised client requirements.

Flexible workspaces are becoming an integral part of the commercial office market. The rise of hybrid work models, prudence in the use of capital, the need for flexibility, workspace planning, and a shift in work culture are amongst the factors fuelling the demand for flexible workspaces.I

According to a CBRE report, the flexible workspace stock in India currently stands over 79 million square feet out of which tier 1 cities account for over 72 million sq.ft. The tier 1 stock is estimated to grow to approximately 124 million sq. ft. by end of CY2027.

Bengaluru is the largest commercial office and flexible workspace market in India currently, accounting for over 30% of the total flexible workspace stock amongst Tier I cities. IndiQube is amongst the leading operators in Bengaluru with a portfolio of 60 centers spanning 5.04 million square feet in AUM, as per the DRHP.

In August this year, Smartworks Coworking Spaces filed its DRHP with the SEBI, which got green signal from the regulator early this month. The issue of the office experience and managed campus platform is a mix of equity and offer for sale by existing shareholders. The IPO comprises a fresh issue of equity shares worth up to ₹550 crore and an offer for sale up to 6,759,480 equity shares of face value of ₹10 each.

Smartworks proposes to utilise the net proceeds for repayment of certain borrowings availed by the company; meet capital expenditure for fit-outs in the new centres and for security deposits of the new centres to be deployed in the financial year 2025, 2026, and 2027. The balance amount will be used for general corporate purposes.

The company is the largest managed campus operator, amongst the benchmarked peers, in terms of total stock as of March 31, 2024. The managed campus platform consists of a total super built-up area (SBA) of 8 million square feet (msf) across 41 centers in 13 cities such as Bengaluru, Pune, Hyderabad, Gurugram, Mumbai, Noida and Chennai, with 182,228 Seats, as of March 31, 2024. As of March 31, 2024, their operational centers across India served 603 clients occupying 130,047 seats. Further, they have 618 clients with 149,660 seats, out of which 8,691 seats are yet to be occupied at their operational centers by the respective clients.