WeWork India gets Sebi nod for IPO; Embassy Buildcon to offload shares via OFS

WeWork India Management Ltd, one of the leading players in the flexible workspace segment, has received approval from the Securities and Exchange Board of India (Sebi) to proceed with its initial public offering (IPO). The Sebi clearance comes after the Embassy Buildcon-backed co-working operator was brought out of abeyance by the markets regulator last week. The company had submitted its Draft Red Herring Prospectus (DRHP) with Sebi in early February.

The company’s IPO comprises an offer for sale (OFS) of up to 43,753,952 equity shares, as per documents filed with Sebi. As the issue is entirely an OFS, no fresh capital will be raised by the company, and all proceeds will go to the selling shareholders.

The company is yet to disclose the price band for the IPO and the issue size, but news reports have suggested that it is looking to raise around ₹4,000 crore through the listing of its shares on the domestic bourses.

Last week, its rival, Smartworks Coworking, launched its ₹582 crore IPO at a price band of ₹387 to ₹407 per share, which opened for bidding between July 10–14. The IPO, which comprised a fresh issue of equity shares worth ₹445 crore and an OFS worth ₹137 crore by the promoters, was subscribed 13.92 times.

Embassy Buildcon, 1 Ariel Way Tenant to offload shares via OFS

Under the OFS, Bengaluru-based real estate major Embassy Buildcon LLP, the promoter, plans to offload up to 3.35 crore shares, while investor 1 Ariel Way Tenant will sell up to 1.03 crore shares. Currently, Embassy Buildcon holds 10.2 crore, or 76.21%, stake in the company, while Ariel Way Tenant owns 3.14 crore, or 23.45%, shares.

Established in May 2016, as per the company, WeWork India Management provides an array of flexible workspace solutions catering to large enterprises, small businesses, startups, and professionals. It benefits from its affiliation with WeWork Global, which operates in 35 countries with around 600 locations. As of September 30, 2024, the company had 94,440 desks across 59 operational centres, spanning a total leasable area of 6.48 million square feet.

On the financial front, the company posted strong performance in the lead-up to its IPO, with revenue from operations surging 67.6% year-on-year to ₹1,314.5 crore in FY23, and further increasing by 26.7% YoY to ₹1,665.1 crore in FY24.

The company’s adjusted EBITDA margin improved from –15.59% in FY22 to 20.40% in FY24, indicating operating leverage and improved cost efficiency.

India’s flexible workspace market set to double by 2027

India’s flexible workspace market is poised for robust growth, with total stock expected to nearly double by 2027, driven by sustained demand across Tier 1 cities, according to data from WeWork India’s DRHP.

As of H1 CY24, over 440 flexible workspace operators are active in the country. The top 10 players—including Smartworks, WeWork India, Table Space, Awfis, and IndiQube—account for the majority share of the total pan-India flexible workspace stock, most of which is spread across multiple urban centres.

India added approximately 12–14 million sq. ft. of new flexible workspace supply in calendar year 2023. The total flexible workspace stock stood at 62–64 million sq. ft. by the end of CY2023, and is projected to grow to 124–126 million sq. ft. by CY2027, marking a compound annual growth rate (CAGR) of 18–19%.

The segment’s total addressable market (TAM) is estimated to reach 325–330 million sq. ft. by 2027, highlighting the substantial headroom for growth.

JM Financial Limited, ICICI Securities Limited, Jefferies India Private Limited, Kotak Mahindra Capital Company Limited, and 360 ONE WAM Limited are the Book Running Lead Managers to the issue.

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