WeWork India IPO: What Investors Need to Know

The much-anticipated WeWork India IPO is set to open on October 3, with a total issue size of ₹3,000 crore. This offering is entirely an offer for sale, meaning that existing shareholders will be selling their shares rather than the company issuing new ones. The bidding for the IPO will close on October 7, and the price band is set between ₹615 and ₹648 per share. As investors prepare to make their decisions, it’s essential to understand the implications and nuances of this IPO.

Objectives of the IPO

The primary aim of this public offering is to enhance WeWork India’s visibility and brand recognition while providing liquidity to its existing shareholders. Although the proceeds will go directly to the shareholders, the listing is expected to create a public market for the company’s equity shares in India, which could be beneficial for future fundraising and growth initiatives.

WeWork India IPO: The Embassy Group Connection

WeWork India has a strategic partnership with the Embassy Group, a leading real estate developer with a portfolio exceeding 85 million square feet. This collaboration is significant as the Embassy Group was the sponsor of India’s first Real Estate Investment Trust (REIT). The relationship provides WeWork India with valuable industry insights and access to premium office spaces, setting it apart from other flexible workspace operators in the country. According to HDFC Securities, this partnership enables WeWork to leverage multi-asset relationships and tap into the Embassy Group’s extensive tenant base seeking flexible workspace solutions.

WeWork India IPO: Global Parentage—A Boon or a Bane?

WeWork India benefits from its affiliation with WeWork Global, which operates around 600 locations across 35 countries. This global presence strengthens WeWork India’s brand and operational expertise. However, this relationship also poses risks; the company relies on WeWork International for the use of its trade name, logo, and trademark. These rights are licensed on a non-transferable and exclusive basis, meaning any disruption in WeWork International’s operations could adversely affect the Indian brand.

WeWork India IPO: Proceedings Against Promoter

A significant risk factor associated with the WeWork India IPO is the ongoing legal proceedings against one of its promoters. According to the Draft Red Herring Prospectus (DRHP), this individual has been named as a respondent in proceedings initiated by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002. These proceedings relate to allegations of corruption and irregularities concerning land development and housing projects awarded by the government in 2004. An adverse outcome in this case could negatively impact the company’s operations and investor confidence.

WeWork India IPO: Long-Term Relationships Matter

Despite the challenges, WeWork India has successfully built long-term relationships with several global marquee brands, including Amazon Web Services India, JPMorgan Services India, and Discovery Communications India. As of June, the company had 87,247 members, with a weighted average membership tenure of 26 months. For large enterprise members, this tenure extends to 31 months, indicating a level of stability and loyalty among its client base.

WeWork India IPO: Challenges in Retaining Members

WeWork India primarily generates revenue through membership fees for workspace usage, with agreements typically ranging from one to three years, and sometimes extending up to six years. However, the company has faced challenges with premature terminations of these agreements, which directly impact revenue flow. This issue raises concerns about the sustainability of its revenue model and the ability to maintain a stable member base.

WeWork India IPO: Valuation Insights

As the exclusive licensee of the WeWork brand in India, the company stands to benefit from its relationship with WeWork Global. However, it’s worth noting that WeWork India achieved profitability only in FY25, having recorded a net loss in the previous fiscal year. At the upper end of the IPO price band, the issue is valued at an FY25 price-to-earnings (P/E) multiple of 50.1x based on post-issue capital, which some analysts consider fairly valued. SBI Securities has maintained a ‘Neutral’ view on the company, suggesting that investors should monitor its performance closely post-listing.

Conclusion

The WeWork India IPO presents a unique opportunity for investors, but it also comes with its share of risks and uncertainties. From its strategic partnerships to ongoing legal challenges, potential investors should weigh these factors carefully before making a decision. As the IPO date approaches, staying informed will be crucial for anyone looking to participate in this offering.