Valuation dispute halts WeWork Inc's plan to exit India after CCI nod

The sale, which involved WeWork Inc, affected by bankruptcy, and its local partner Embassy Group, was set to include a 13 per cent stake sale by Embassy Group in WeWork India

WeWork Inc’s plan to sell its 27 per cent stake in its Indian subsidiary and exit the country has been halted, despite receiving approval from the Competition Commission of India (CCI), according to a report by The Economic Times.

The sale, which involved the bankrupt WeWork Inc and its local partner Embassy Group, was set to include a 13 per cent stake sale by Embassy Group in WeWork India, the report added.

The transaction was intended to involve a consortium of investors, including Enam Group’s family office, A91 Partners, and CaratLane founder Mithun Sacheti, in a Rs 1,200-crore secondary deal as reported in April this year.

Embassy Group holds a 73 per cent share in WeWork India, while the remaining 27 per cent is owned by WeWork Inc.

The transaction, approved by the CCI on June 18, was structured as a two-step deal where both WeWork Inc and Embassy would sell around 40 per cent of the company to new investors, the business daily said. However, the deal eventually collapsed due to a disagreement over valuation, according to sources familiar with the matter.

Embassy Group was expected to purchase the 27 per cent stake held by WeWork Inc and subsequently bring in new investors as the company prepared for an initial public offering (IPO).

Karan Virwani, chief executive officer of WeWork India, is reportedly in discussions with 360 One (formerly IIFL) to acquire a portion of WeWork Inc’s 27 per cent share, according to the sources.

Embassy will leverage its shareholding to secure financing from 360 One, the report said, citing a source.

This development follows a successful IPO by WeWork India’s competitor, Awfis, in May, which indicated a sector-wide recovery. The Rs 600-crore Awfis IPO was oversubscribed by 108 times, and its stock has surged over 83 per cent since its listing, reaching Rs 702.8 on Thursday, though it was down 1.3 per cent.

Since beginning operations in 2017, WeWork India has amassed over 8 million square feet of space across 54 locations in cities such as New Delhi, Bengaluru, Mumbai, Gurugram, Noida, Pune, and Hyderabad.

In June 2021, WeWork Global invested $100 million to acquire a 27 per cent stake in WeWork India. This infusion of capital played a crucial role in helping the Indian business and office space market navigate the financial challenges brought on by the pandemic.