WeWork to expand with view to quick profitability path

WeWork's parent - The We Company - had decided to postpone its IPO to focus on its core business. Reuters Photo

Realty firm Embassy Group, which owns WeWork India, on Tuesday said there will be no impact on the Indian operation of co-working business due to deferment of initial public offering of US-based WeWork.

Bengaluru-based Embassy, a major player in Indian commercial real estate, had partnered WeWork in 2016. WeWork India is an independent entity with the right to execute WeWork's business in India and pays a management fee to the US-based company.

On Monday, WeWork's parent - The We Company - had decided to postpone its IPO to focus on its core business. The development came a week after the SoftBank-backed startup removed founder Adam Neumann as its chief executive officer.

"WeWork India is a strategic long-term play for Embassy group and its performance has exceeded our expectations this year. With accelerated expansion plans, WeWork India is firing across all metrics and its fundamentals have never been stronger," an Embassy Group spokesperson told PTI in an e-mailed query.

Under the leadership of Karan Virwani and Ryan Bennett, the WeWork India team is currently focused on strategic expansion with an accelerated path to profitability, the spokesperson added.

"WeWork India, which is wholly owned and funded by Embassy group, is our big bet in this space... With over 40 per cent of the co-working market of over 400 players, WeWork in India has 25 locations in business hubs across the country," the spokesperson said.

Despite challenges on a global level, Embassy Group is upbeat about the prospects of WeWork in India.

"WeWork India’s consistent growth is aided by expansion in multi-year leases by members, and the growth in enterprise members. As it grows consistently quarter on quarter, WeWork India is continuing to focus on signing new lease agreements with landlord partners across the country," the spokesperson said.

Currently, over 50 per cent of WeWork India members are large enterprises across industries. Low operational costs, better infrastructure and networking opportunities are key benefits that are wooing enterprises and startups to opt for co-working spaces like WeWork.

Embassy group also said it was ready to work with new management at global level.

"At the global executive level, we look forward to working with the new WeWork co-CEOs who come with strong financial management experience and business understanding across multiple markets".

Globally, WeWork is present in over 110 cities in 29 countries, serving more than 5.27 lakh members daily.

According to Knight Frank India report, the first six months of 2019 saw 4 million sq ft of office space leased by co-working operators across major cities of India, up from 2.8 million sq ft in the same period last year.

In a statement on Monday, newly appointed Co-CEOs Artie Minson and Sebastian Gunningham had said WeWork has decided to postpone the IPO to focus on core business.

"We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future," they had said.

Last month, WeWork's Board of Directors had announced that co-founder Adam Neumann would step down as CEO while continuing as non-executive chairman of the board.

Artie Minson, formerly co-president and chief financial officer, and Sebastian Gunningham, formerly vice chairman, were named co-CEOs of the company.

In that statement, Neumann had said in recent weeks, the scrutiny directed toward him had become a "significant distraction" and that had led to his decision to step down.

Reports suggest that Neumann had come under scrutiny from board members and investors who blamed the CEO for the company's financial troubles.

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