InGovern Research Services flags concerns over weak finances and disclosure issues in WeWork IPO
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WeWork India continues to report negative cash flows, high lease costs that consume over 43% of revenues | Credits: Getty Images
InGovern Research Services flags concerns over weak finances and disclosure issues in WeWork IPO
InGovern Research Services has raised red flags over WeWork India's IPO, citing weak financial health and inadequate disclosure practices. Despite a reported profit in FY25, the company faces ongoing losses, high lease costs, and legal issues, raising concerns about its governance and operational risks.
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The company, incorporated in 2017, operates flexible workspaces across Bengaluru, Mumbai, Delhi NCR, Pune, and Hyderabad under a long-term licence from WeWork Global.
WeWork India continues to report negative cash flows, high lease costs that consume over 43% of revenues | Credits: Getty Images
Two days after WeWork India Management Limited launched its highly anticipated initial public offering (IPO), targeting approximately ₹3,000 crore via an Offer for Sale (OFS), InGovern Research Services raises concerns about WeWork's weak financial health and disclosure practices.
According to the Red Herring Prospectus (RHP), no new capital will have to be infused into the company, with funds going entirely to selling shareholders, primarily promoter Embassy Buildcon LLP and WeWork International entities. Anchor investors subscribed to nearly 45% of the issue, valued at ₹1,348 crore, at the upper price band of ₹648 per share.
The company, incorporated in 2017, operates flexible workspaces across Bengaluru, Mumbai, Delhi NCR, Pune, and Hyderabad under a long-term licence from WeWork Global.
According to InGovern note, despite its rapid expansion and revenue growth of about 22% CAGR between FY23 and FY25, financial pressures remain. WeWork India continues to report negative cash flows, high lease costs that consume over 43% of revenues, and a net profit in FY25 driven largely by a deferred tax credit, not operational performance.
The note stated that the IPO proceeds mainly benefit promoters Embassy Buildcon LLP and WeWork International, with anchor investors allocated shares worth about ₹1,348 crore, covering 45% of the issue. Despite reporting a FY25 profit, the company has experienced consistent losses, negative cash flows, and high lease-related costs, which consume over 43% of revenues.
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"Promoters face ongoing serious legal proceedings, raising concerns over disclosure adequacy and fit-and-proper status under SEBI regulations," per the InGovern note.
WeWork India operates under a 99-year license with WeWork Global, making it heavily dependent on continued promoter control and brand compliance, posing substantial operational risks, according to InGovern.
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According to the InGovern note, a significant portion of promoter shares was pledged pre-IPO for borrowing purposes. While these shares have been released, they must be repledged if the IPO listing is delayed, which could threaten promoter control and investor interests. These points highlight the balance of growth potential and governance risks surrounding the IPO.