WeWork India to focus on 6-8 cities, expects to be valued at $2 bn: CEO

Co-working space company 'would love' to go public but has not decided about that yet: Karan Virwani

Co-working giant WeWork India would focus on the country’s six-eight biggest cities as it pushes for a threefold increase in space, from 6 million square feet (mn sqft) to 20 mn sqft, by 2028. According to the company, its valuation currently stands at $2 billion and the business is conducive to going public, but the final call on the matter is still to be taken.
 

“If you see India’s workforce, about 80 per cent is hired by the top 100 companies, which all have executives residing in these big cities. So there is a large market for us to grow as we have not even scratched the surface. Total commercial office space in these six cities is collectively 750 mn sqft. Currently, we have less than 1 per cent of that share. Our aim is to increase that to 2 per cent by 2028, when it (commercial office space) is projected to hit 1 billion sqft in these cities,” said Karan Virwani, founder and chief executive officer of WeWork India.

WeWork’s strategy is different from many of its competitors which are looking at expansion in a greater number of cities. Awfis, for instance, has co-working spaces in over 14 cities, including Kochi, Jaipur, and Indore.

Smartworks, which already has operations in 7 locations, recently announced entering Jaipur and Indore.
 

According to Virwani’s estimates, his company should be valued more than $2 billion, as it is profitable, has free cash flow, and does not need to raise much money for growth. The company was valued at $500 million in 2020 as a joint venture with WeWork International (which owns a 27 per cent share in the company) and the Embassy group. The company would like to go public but no decision has been taken as of yet.
 

“We have been making profits since November last year, so we are generating free cash to fund our capex (fitments). And large numbers of our landlords have now mostly become partners and are also investing with us in capex, so there is limited requirement for a fundraise. But, in my head, we should be valued today at $2 billion-plus,” said Virwani.
 

WeWork India’s partners include the country’s top 15-20 real estate companies — DLF, Rahejas, Prestige, and others — and only 15-20 per cent of space is in-house, through the Embassy group and mostly in Bengaluru.
 

About the possibility of going public, Virwani said: “We would love to but we have not chosen a path just yet. We have a business that is extremely conducive to the public markets. But we have not taken a call and that will depend on the markets and many other factors.”
 

Virwani said co-working has evolved from a place used by start-ups, small and medium enterprises to large companies seeking a “flexible option” for office needs. “In the pre-Covid period, the ratio was 50-50 between start-ups, SMEs, and MSMEs, and large enterprises; after Covid, this ratio has become 70 per cent enterprises and 30 per cent the rest. So, we have been able to rope in big companies like ICICI Bank and Grant Thornton, among others.”

There are three reasons for big companies seeking co-working space. They can sign up for leases as short as one month, though the average is between 24 months and 5 years. Two, they have the flexibility of shutting down capacity at any time if they need to reduce costs. Three, they can swap seats from one city to another where they might have a temporary requirement of more people.