WeWork shares in India's IPO boom
WeWork India has filed for a domestic IPO, allowing US-based co-working giant WeWork to cash in part of its stake as demand for flexible workspaces spikes in the country.
The listing, which will comprise only secondary shares, is expected to raise around Rs40bn (US$457m), according to people with knowledge of the matter.
Embassy Buildcon, a unit of Indian property developer Embassy Group, plans to sell 33.5m shares in the IPO, while 1 Ariel Way Tenant Limited, a WeWork unit, intends to sell 10.3m shares or around one-third of its holding.
Embassy currently owns 76.21% of WeWork India and WeWork holds 23.45%, according to the IPO filing.
Following an overexpansion that left it laden with debt, WeWork Inc went into Chapter 11 bankruptcy between November 2023 and June last year, during which it eliminated more than US$4bn in debt and cut about US$12bn in future rent expenses.
The restructured WeWork is valued around US$750m, down from US$47bn at its peak in 2019.
The Indian unit, in which WeWork is not involved in day-to-day management, was not included in the bankruptcy proceedings.
In April last year, WeWork and Embassy engaged in talks to sell 40% of the Indian unit (including the entire WeWork stake) to a group of investors for Rs12bn. But, although the deal was cleared by competition authorities, it fell apart after Awfis Space Solutions, another Indian co-working space provider, raised Rs5.9bn in May in an IPO that was oversubscribed more than 100 times. According to media reports at the time, the successful Awfis deal convinced WeWork and Embassy that they should not proceed with the sell-down at the agreed valuation.
Last month, WeWork India raised Rs5bn from a rights issue and issued some bonus shares to Embassy, reducing WeWork's stake from 27% to its current level.
Embassy and WeWork are selling a combined 32.6% stake in the IPO. At Rs40bn, the IPO gives WeWork India a value of around Rs123bn, equivalent to US$1.4bn, far more than was implied by WeWork's aborted sell-down attempt last year.
Higher valuation
Going public in India's still hot IPO market should allow WeWork India to achieve a good valuation.
“2025 will continue to be another big year for Indian IPOs. Strong domestic and foreign institutional demand, and keen retail participation are expected to support IPO valuations,” said an ECM banker.
India was the world’s top IPO venue in 2024 with total fundraising of US$20.5bn, surpassing Nasdaq and NYSE, according to LSEG data. Bankers expect IPO volume to reach US$20bn–$25bn this year.
“Given the upbeat sentiment, WeWork India will probably achieve a better valuation in the public market,” said the banker.
Strong growth
Since its IPO, Awfis's shares have risen 81% from the issue price, providing a positive backdrop for the WeWork India float.
Investors believe India will continue to experience strong growth in demand for flexible workspaces as companies adopt hybrid work models and start-ups seek cost-effective accommodation.
According to real estate consultancy CBRE, the country’s flexible workspace market in Tier 1 cities, which was around 62 to 64 million square feet in 2023, is expected to double in size to 124 to 126 million square feet by 2027.
Founded in 2017, WeWork India hosts tenants of all sizes, from large enterprises to individual workers. As of mid-2024, about 93% of its portfolio was in Grade A properties.
The company posted a profit of Rs1.75bn for the six months ended September 30 on total income of Rs9.6bn. For the year ended March 31 2024, it posted a loss of Rs1.36bn on total income of Rs17.4bn.
JM Financial, ICICI Securities, Jefferies, Kotak Mahindra Capital and 360 ONE WAM are the bookrunners.