WeWork India Expects 25% Growth In Revenue For 2020 Despite Covid-19
Co-working major WeWork India expects its revenue to grow by 25% this year as demand for flexible workspace remains strong despite Covid-19 pandemic, its Chief Executive Officer Karan Virwani said on Friday.
WeWork India, which is owned by Bengaluru-based realty firm Embassy Group, has 34 centres comprising 60,000 desks across six major cities. WeWork Global had in 2017 partnered with Embassy Group to enter Indian market.
In an interview with PTI, he said the company will acquire clients first and then take on lease Grade-A office space as against the earlier practice of setting up centres first and then reaching out to potential customers.
'Work Near Home' and decentralised workforce model are some of the new trend emerging in the office segment, Virwani said.
WeWork India has recently leased a large space to a law firm in Bengaluru and is now targeting educational institutions that are exploring to set up their base in coworking centres during this pandemic.
Virwani expressed confidence that WeWork India would become profitable next year and said the company was adequately fundedwith the infusion of Rs 750 crore by WeWork Global in June.
"Business is doing good. Customers want more flexible workspace. Not only the new age but traditional businesses are also looking for coworking space to reduce their capex," he told PTI.
Virwani said the company lost 15% clients after the outbreak of coronavirus disease and subsequent lockdown, but the company has gained new clients who are paying more.
"We expect our revenue to grow 25% during this calendar year," he said, but declined to share the topline it achieved in 2019.
Asked about expansion plan, he said the company has not opened any centre since April but plans to open one in November in Bengaluru comprising over 2 lakh sq. ft. space.
"We will expand based on demand. We will find new clients and then sign up real estate space," Virwani said, indicating a shift in the company's growth strategy.
Asked about the structure of the funding from WeWork Global, he said the company raised $100 million (about Rs 750 crore) in the form of compulsory convertible debentures.
Post converison of these debentures which is due next year, Virwani said WeWork Global will have 20% stake in WeWork India.
"The fund was raised at a valuation of $500 million," he said.
Sandeep Mathrani, CEO of WeWork Global, has joined the board of WeWork India.
Virwani said the company has adequate capital and there is no immediate plan to raise funds.
Being bullish on the coworking segment, he said coronavirus pandemic has accelerated the shift to flexible workspaces.
As the Covid-19 pandemic poses unprecedented challenges for educational institutions around the world, Virwani said WeWork India will offer students flexible space options that are tailor-made for productivity.
The company can help educational institutions de-densify their spaces, create decentralized campus hubs in new cities, and bring classrooms to where students are, he added.
Corporate clients contribute around 65-70% of the business and it will remain so going forward, he said.
Embassy Group is a major player in the Indian real estate market. It has also launched the country's first real estate investment trust.