WeWork India, a key player in the co-working space industry, has officially debuted in Chennai, marking its first foray into this bustling metropolitan city. This move underscores WeWork India’s commitment to expanding its footprint across the country, even as its parent company undergoes significant changes in ownership and strategy.
A Strategic Expansion into Chennai
WeWork India’s entry into Chennai is a strategic step that aligns with the company’s broader expansion goals. Since beginning operations in 2017, WeWork India has rapidly grown, boasting over 8 million square feet of assets across 54 locations in major cities including New Delhi, Bengaluru, Mumbai, Gurugram, Noida, Pune, and Hyderabad. The new Chennai location is expected to cater to the growing demand for flexible office spaces in the city, providing a modern and collaborative environment for startups, freelancers, and large enterprises alike.
Ownership Changes: WeWork Inc’s Exit
Amidst this expansion, WeWork India is experiencing a major shift in its ownership structure. The Competition Commission of India (CCI) recently approved the sale of WeWork Inc’s entire 27.5 percent stake in its Indian subsidiary. This decision is part of a larger transaction where WeWork Inc and WeWork India’s parent company, Embassy Group, will jointly sell approximately 40 percent of their shares in the Indian unit.
This change in ownership marks WeWork Inc’s withdrawal from the Indian market. Currently, Embassy Group holds a majority 72.5 percent stake in WeWork India, with the remaining 27.5 percent owned by 1 Ariel Way Limited, a UK entity under WeWork Global. The withdrawal is a strategic move as WeWork Inc restructures to address financial challenges in its home market.
Financial Performance and Growth Prospects
Despite the global challenges faced by WeWork Inc, WeWork India has been a success story. In the fiscal year 2022-23, WeWork India reported impressive financial results with revenues of Rs 1,400 crore, an EBITDA of Rs 250 crore, and a profit after tax (PAT) of approximately Rs 60 crore. The company’s CEO, Karan Virwani, highlighted that WeWork India operates at a comfortable occupancy rate of over 80 percent, well above the break-even point of 57-58 percent.
WeWork India’s robust performance has been driven by its strong occupancy rates and the ability to maintain profitability without external capital infusion. This success is a testament to the viability of the co-working model in India, which has seen a resurgence in demand post-pandemic. The company is on track to achieve a 40 percent year-on-year growth, further solidifying its market position.
The Bigger Picture: Global Challenges and Local Triumphs
While WeWork India thrives, its global counterpart has been navigating turbulent waters. WeWork Global filed for bankruptcy in the US last November and has since been engaged in a comprehensive reorganization and restructuring process aimed at reducing debt and stabilizing its balance sheet. This financial turmoil has necessitated the withdrawal of WeWork Inc from certain international markets, including India.
Despite these challenges, WeWork India’s business model has become a benchmark for the global team. According to Virwani, the success of the Indian operation has influenced global strategies, showcasing the resilience and adaptability of the co-working space model in diverse markets.
A Competitive Landscape
WeWork India’s expansion into Chennai comes at a time when the co-working space industry in India is experiencing a post-pandemic boom. Competitors such as Bhive, CoWorks, Indiqube, and 91Springboard are all witnessing increased demand. Awfis, another prominent player in the industry, has recently gone public to raise funds to meet this growing demand.
Looking Ahead
As WeWork India continues to expand, it remains focused on delivering value to its members and stakeholders. The company’s ability to sustain growth and profitability amidst global financial challenges speaks volumes about its strategic planning and execution.
The debut in Chennai is not just a new chapter for WeWork India but also a reaffirmation of its commitment to providing flexible and innovative workspace solutions across the country. With a strong foundation and a clear vision, WeWork India is poised to continue its upward trajectory, contributing to the dynamic and ever-evolving landscape of co-working spaces in India.
