WeWork India fights for funds, relevance; hopes to raise $200 million

Embassy Group may pitch in

Feeling the domino effect of WeWork’s stock market launch debacle, its India franchise is planning to raise $200 million on its own by the end of this year. The firm, which reportedly saw a breakdown of talks to raise $100 million with a bank after the WeWork IPO launch debacle, hopes to prove that its India business is making profits.

Jitu Virwani, chairman and managing director of Embassy Group, said the firm was also looking at disinvestment of Rs 4,000 crore ($563 million), part of which might go towards the co-working business. 

“We plan to raise Rs 4,000 crore to pare debt and keep cash reserve for the company. We are in talks with a couple of foreign investors and may also form an investment platform with one of them.”

Virwani said the India co-working business was profitable, but the turmoil in the global entity did lead to a breakdown in talks for fundraise. 

“Adam Neumann (WeWork co-founder) or no Adam Neumann, our business is here to stay. It has been a bit of a challenge for us, we had a bit of a setback when we were looking to raise $100 million from ICICI Bank. But we’ve decided to put our own money into the business (if needed),” he said. 

‘We are in talks with a couple of foreign investors and may form an investment platform with one of them’- Jitu Virwani, CMD, Embassy Group

WeWork India is owned by Embassy Buildcon that, in turn, is owned by Virwani. Embassy is one of the largest developers and owns several commercial and residential projects.

Virwani’s son Karan, who heads WeWork India, said the firm was in talks with multiple investors and hoped to close the round by the end of this year. 

“We have gone to multiple investors, including some of the existing ones in WeWork, a good mix of Indian and foreign funds, some of whom are among the largest equity investors which are in the market. Also, a lot of structured debt equity players who would look at the opportunity look at the cash flow and profitability and be willing to invest in the business. We are hoping to raise $200 million by end of this year,” he said.

He said WeWork India was profitable at an operational level and would achieve overall profitability by the end of next year. He also stressed that the unit economics of WeWork India makes sense.

He said in India they operated over 45,000 desks. The plan is to get to 100,000 desk milestone by 2020-end. Facing competition from deep-pocketed players, the company is launching desks that would be priced at around Rs 5,000.