News: Coworking startup WeWork India planning to raise $200 Mn

#FundingAndInvestment

Coworking startup WeWork India planning to raise $200 Mn

The money will be used to fund its growth as demand soars for shared workspaces in the country.
Coworking startup WeWork India planning to raise $200 Mn

WeWork India, the Indian affiliate of New York-based coworking startup We Co, plans to raise $200 Mn to fund its growth as demand soars for shared workspaces in the country. Interestingly, the fund-raising in India comes after its parent postponed a much-awaited initial public offering (IPO) in September, followed by the ouster of its co-founder Adam Neumann by two co-chief executives. In addition, it is also looking to slash upto 2,000 jobs globally.

However, in India, it is business as usual for the coworking giant. It had recently raised around ₹500 Cr of debt and the fresh funds are expected to be raised through a combination of equity and structured debt, as per top company executives.

Nevertheless, the delay of WeWork’s global IPO could only result in valuation hiccups for the Indian affiliate when it goes out to raise funds.  The venture isn't owned by The We Company - it's set up as a franchise run by a group of investors including Indian real estate developer Embassy Group. Earlier this year also, WeWork India was in talks to raise around $100 Mn from a private investor, but the deal didn’t go through. Separately, the Embassy Group, holding company of WeWork India, owned by Karan Virwani, CEO, WeWork India, plans to raise Rs 4,000 Cr by divesting certain assets to institutional investors and may also pump some capital into the co-working business on its own.

While the coworking space failed to go through with its IPO in the US this year, in India, as per Karan, the focus has been to grow the business profitably. The firm, which operates around 45,000 desks across cities, leased 10,000 desks in the September quarter and aims to reach the 100,000-desk milestone by 2020-end. 

Going forward, the coworking sector’s next phase of growth will depend on the capital pumped into it, operational efficiency and investor confidence. And the same applies to WeWork India. Unlike other Asian markets such as China and Japan, We Co. operates on a revenue and profit-sharing model with its Indian partner. At present, WeWork India centres are profitable on an individual basis, but it is yet to turn profitable at the company level, which as per Virwani, is expected to happen next year.

Topics: #FundingAndInvestment, Technology

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