Flex space firm Smartworks Coworking Spaces, whose initial public offering (IPO) opens on July 10, plans to focus largely on mid-to-major corporates to drive their leasing and cash flows on listing, the company's founders, managing director Neetish Sarda and Harsh Binani said in an interaction with Moneycontrol. The IPO, whose size may reach upto around Rs 600 crore, includes a Rs 445 crore fresh issue, and an offer-for-sale component, which combined may take the issue to around Rs 583 crore at the upper end of the Rs 387 to Rs 407 price band.
Besides the founders Sarda and Binani, Temasek-backed real estate firm Keppel Land is also liquidating a portion of its 19 percent stake in Smartworks, which it acquired by its investment of $29 million in multiple tranches. After the IPO, the promoters, including Sarda, are expected to retain around 58 percent in the company, while Keppel Land, through an Indian subsidiary, will hold around 15 percent stake in Smartworks.
While the company cut the proposed size of the IPO, by cutting the fresh issue size from Rs 550 crore, as well as the number of shares in the offer-for-sale, Sarda said that the IPO size was reduced due to Keppel Land paring down on their portion for sale, "showing their confidence in the business".
Smartworks is slated to be the second major flex space player to head to a public listing, after Awfis Space Solutions listed last year. Awfis' stock has proved to be a favourite among investors, with its share price increasing by nearly 50 percent over the past year. Other flex space firms, such as Embassy Group-backed WeWork India, IndiQube, and others have firmed up plans to tap the capital markets.
Sarda added that Smartworks' practice of leasing entire buildings, often from non-institutional landlords, helps them attract larger clients, who lease more number of seats with them.
"For us, the target market is very different (from other flex space operators). We focus on mid-to-large enterprises. In India, if you look at the supply of real estate, 70 percent comes from non-institutional landlords, whose core business is not real estate, and are often HNIs or ultra-HNIs. Yet, majority of the demand comes from large corporates. We realised this opportunity where we create a platform to take buildings from these landlords, put the Smartworks brand and create a campus, and build it out with all amenities that MNCs expect," Sarda said.
He also noted that 80 percent of the company's revenue comes from large enterprises, with 65 percent of the company's topline was from companies taking at least 300 seats at any given campus. As on March 31, Smartworks was one of the largest flex space operators with around 10 million square feet under management, with more than 200,000 seats across most major markets in India, including a small presence in Singapore, and a foothold in Tier-II markets as well.
Smartworks has followed a micro-market strategy to take up more share at in-demand neighbourhoods, such as offering four clusters for leasing in Pune's Baner-Balewadi area, now a mixed-use neighbourhood with significant presence of offices, retail, and residences.
Across its properties in India, Smartworks counts Google, Persistent Systems, Adidas, among others, with Binani adding that the company has worked to diversify the sectoral identity of its tenants, in order to lessen dependence on technology services, or tech-led global capability centres (GCCs).
"We are currently present in 19 of the 28 major micro-markets across the country. The idea is to double down on the micro-markets that we are doing well in, and also continue to enter the remaining nine micro-markets," Sarda added.
As for the company's finances, it reported losses for both FY25 and FY24, with the FY25 loss widening year-on-year to Rs 63 crore, although it remained profitable from earnings before interest, taxes, depreciation, and amortisation (EBITDA) basis. Smartworks revenues also grew by 32 percent year-on-year in FY25 to Rs 1,374 crore. Binani said that the company plans to retire some of its higher-cost debt using the proceeds of the IPO, to the tune of around Rs 114 crore.
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