Breakingviews - WeWork India's IPO sounds a bit too familiar
As a separate entity, WeWork India was unscathed by WeWork Global's entry into bankruptcy proceedings in 2023. It counts the company as a minority investor and pays it a management fee, recently renegotiated down to 2.84% of revenue. Embassy Group, a Bengaluru-based developer, owns 74% of the firm.
The franchisee stands apart in other ways, too. For a start, it is profitable. WeWork Global was racking up billions of dollars of losses ahead of its IPO push. By contrast, WeWork India turned a small net profit in the six months to September 2024.
The franchisee's business looks more disciplined too. Its centres are in top cities like Bengaluru where demand has kept occupancy rates well over 80%, according to property consultancy Knight Frank. Its tenants include JP Morgan (JPM.N), opens new tab and Thomson Reuters (TRI.TO), opens new tab, the parent of Reuters Breakingviews.
And the company is experimenting with ways to reduce costs: in three of its 59 centres, landlords cover operating and setup costs for a cut of the revenue; another five run on fixed-fee services. The relationship with Embassy Group, also a partner to Blackstone (BX.N), opens new tab, makes it easier for WeWork India to access prime office real estate too.
On a multiple of 3.65 times 2026 sales, the same as Peak XV Partners-backed local rival Awfis Space Solutions (AWFI.NS), opens new tab, WeWork India's enterprise might be worth $814 million. Yet that would be nearly double the valuation that was mooted in local media, opens new tab in April last year, and about twice the multiple of London-listed International Workplace Group (IWG.L), opens new tab which has over 4,000 workspace locations globally.
WeWork India is also going public in what looks like an increasingly crowded market. The Executive Centre, backed by KKR (KKR.N), opens new tab, is preparing, opens new tab to list, too. Smartworks Coworking Spaces (SMAW.NS), opens new tab debuted earlier this month. What's more, none of the proceeds from the global brand's potential $400 million, opens new tab offer will go to the company: it's just an opportunity for existing investors to cash out. Given the difficult history of the brand, WeWork India should have delayed its IPO until it proved itself a bit more.
Follow Ujjaini Dutta on LinkedIn, opens new tab and X, opens new tab.
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