The Competition Commission of India (CCI) has cleared the US-based co-working space firm WeWork Inc to sell its entire 27.5 percent ownership in its Indian unit.
The sale is a two-step process wherein WeWork Inc and WeWork India's parent, Embassy Group, would jointly sell roughly 40 percent share in the local co-working subsidiary. A detailed order from the antitrust regulator is expected later. WeWork Inc would withdraw from the Indian market as a result of the agreement.
While the parties had made progress, the deal was stuck with the CCI because such a large fund infusion in a market leader required regulatory approval, sources had told Moneycontrol earlier.
Now that the approval has come through, WeWork’s ownership structure will change in India. Currently, the Embassy Group owns a majority stake of 72.5 percent in WeWork India. The remaining 27.5 percent is owned by 1 Ariel Way Limited, a UK entity that is a subsidiary of WeWork Global.
Even as WeWork Inc suffers in the US, in India, it has been a successful business.
“The global team needs continuous funding to grow their business. Ours is different, we are making money and do not need external capital. The global team looked at our model and how successful it was, then made it the benchmark for them to execute everywhere else in the world,” Karan Virwani, CEO of WeWork India had said earlier.
WeWork India said it clocked revenues of Rs 1,400 crore in FY23, had an EBITDA of Rs 250 crore and a profit after tax (PAT) of roughly Rs 60 crore.
It has about 90,000 desks in the country and boasts of an occupancy rate of over 80 percent, which is beyond comfortable because it achieves break even at an occupancy rate of 57-58 percent, per Virwani. The company was on track to grow 40 percent year-on-year (YoY).
WeWork India, which started operations in 2017, has over 8 million square feet of assets signed across 54 locations in New Delhi, Bengaluru, Mumbai, Gurugram, Noida, Pune and Hyderabad.
The company posted a turnover of Rs 1,400 crore in 2022-23. In June 2021, WeWork Global invested $100 million in the Indian wing to pick up a 27.5 percent stake in it. The investments helped the Indian business to face the financial difficulties during the Covid days, which had severely affected the office space market.
WeWork Global last November filed for bankruptcy in the US and also started a comprehensive reorganisation and restructuring process to cut down on debt and firm up its balance sheet.
The announcement of WeWork Inc's withdrawal from India coincides with co-working companies such as Bhive, CoWorks, Indiqube, and 91Springboard seeing a post-pandemic surge in demand. Awfis, financed by Peak XV Partners, has gone public to raise funds to meet the growing demand.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
