Embassy-backed WeWork India's IPO a journey from apathy to investor frenzy: MD and CEO Karan Virwani

Karan Virwani, MD & CEO, WeWork India Management Limited

WeWork India, the co-working venture of Bengaluru’s Embassy Group, is drawing strong investor interest for the Rs 3,000 crore IPO that opens on October 3, in sharp contrast to investor apathy of past several years, MD & CEO Karan Virwani told Moneycontrol in an interview.

The first global franchise of WeWork Inc, once a global poster child of the startup world, has faced many headwinds due to WeWork’s internal problems that eventually led the parent company to bankruptcy in 2023.

“…for eight years no one was willing to fund us at all,” recalled Virwani. But that sentiment has flipped, he said, noting that investors are vying to be part of the WeWork India story.

This transformation follows a broader acceptance of flexible offices, but also years of restructuring, debt repayment and strategic positioning, that have put the firm on stronger financial footing.

From Debt Burden to Self-sustaining Growth

The turning point for WeWork India came in January 2024 when promoter entity, the Embassy Group, infused nearly Rs 500 crore into WeWork India through a rights issue, primarily to retire high-cost borrowings.

“All of that capital went into paying off debt we had taken at a time when no one else was willing to fund the business,” Virwani said. The result has been a leaner balance sheet and healthier financials.

Currently, WeWork India’s debt stands at around Rs 200 crore, sharply lower, and Virwani has projected that by March 2026, the net debt will be ‘almost negligible’.

The company also generates sufficient cash flow to meet capital requirements without depending on external infusion. “The business has become completely self-sustaining,” the MD and CEO said.

This financial turnaround coincides with a broader surge in demand for flexible offices in India, as enterprises have embraced hybrid models after the pandemic, accelerating adoption of co-working spaces.

“The overall demand is what gives us confidence - companies are increasingly adopting the flexible workspace model, and we are the clear leaders in this space,” Virwani said.

Embassy and WeWork IPO Proceeds

WeWork India’s public issue is a pure offer for sale of shares by Embassy group and WeWork, and the promoter will receive Rs 2,294 crore from the IPO of over 35 million shares.

“Most of it will go to pay down debt at the group level. Some will unlock value in new projects and new assets, and some will simply return the risk capital that Embassy had put into this business and stood by for eight years,” said the MD and CEO.

For Embassy, the IPO also marks a validation of its early bet on WeWork, especially at a time when global investors were wary of investing. The real estate major’s backing helped WeWork’s Indian franchise build scale.

A Crowded Market

WeWork India has entered the primary market at a time when competitors such as Awfis and Smartworks have already gone public. However, that has, paradoxically, helped rather than hurt, Virwani argued.

“All these operators getting listed was a huge benefit. They educated the investors about the fundamentals of the business. By the time we met the investors, they were already aware of how the model works,” he said.

WeWork India pitch was focused on differentiating factors such as scale, financial strength, and brand, the MD and CEO added.

The company reported a revenue of just over Rs 2,000 crore in FY24, with adjusted EBITDA margins of 22 percent. Both metrics, Virwani said, are significantly stronger than peers.

“From a revenue standpoint we are between one-and-a-half to two times larger. Our EBITDA margins are double that of competitors,” he said.

On the pricing of the public issue, at Rs 615-648 apiece, Virwani said the company has taken a longer term view.

“The IPO pricing is slightly below the price at which we ourselves did a rights issue. We want investors to make their returns through this process,” Virwani explained.

Sticking to the WeWork Brand

Despite the baggage that the WeWork brand carries, Virwani said that the company will continue with the brand name.

“WeWork India was the first franchise globally. The brand remains category-defining. In India, we’ve built significant value into the name over the last eight years. We have no plans to change that in the foreseeable future,” he said.

Despite its US troubles, WeWork Global continued to be invested in India. Now, under its new owners, Virwani said the business has stabilised and even turned profitable over the last two quarters. The share sale by the parent entity in the IPO will be proportional to Embassy’s. “I don’t foresee them (WeWork Global) being large sellers. Every conversation we’ve had is about the growth potential of the India business,” said Karan Virwani.

The brand has tangible benefits, as WeWork India pays a management fee of just 2.5% to parent but, commands a 10-20% pricing premium because of the name and its global network. “The value we derive is far greater than the cost,” said the MD and CEO.

Growth Drivers: GCCs, Enterprises and Startups

WeWork India’s growth story has mirrored broader shifts in the workplace. Initially popular among startups and freelancers, flexible offices are now being adopted by large enterprises. Today, 80 percent of WeWork India’s member base comprises corporates, including private banks, Fortune 500 multinationals and a growing roster of global capability centres (GCCs).

“About 36% of our members are GCCs. We’re seeing a progression from just Fortune 1000 firms offshoring to India, to a long tail of mid-tier global businesses setting up here. And they’re not just hiring back-office roles - they’re hiring front-end developers and customer-facing teams. It’s a clear shift from outsourcing to insourcing,” Virwani said.

Startups remain an integral part of WeWork’s ecosystem in India. Unicorns like Zepto and Meesho started out at WeWork offices before scaling up. “We want to be the urban infrastructure play that allows entrepreneurs to focus on their core business while we take away the operational headaches,” Virwani said.

The H-1B Effect

Virwani believes the churn in the US immigration policies could boost demand for Indian workspaces. With the tightening of H-1B visas, more talent is expected to stay in India, driving innovation and entrepreneurship.

“If brain drain reduces and people actually come back, the amount of innovation that will happen in India will be huge. Our buildings are where that growth will take shape,” he said.

Focus on Metros

While some rivals are testing smaller markets, WeWork India remains committed to the metros. Last year, India saw a record 77 million square feet of office absorption, with 95 percent concentrated in the top eight cities, according to Virwani.

“Our growth strategy is to follow demand. We will go deeper into metros rather than spreading thin into smaller markets,” Virwani said.

With that idea, WeWork has Tier II cities on the radar. “If any city reaches critical mass, sustained demand and adequate Grade A supply, we will consider it. But today, most quality assets and developers remain concentrated in the top eight cities,” added the MD and CEO.