WeWork to Invest USD 100 Million in Indian Division to Fuel Growth
WeWork India has already proved to be profitable at the center level and aims to break even by the end of June 2020 at the company level as well
American commercial real estate company providing shared workspaces for tech startups, WeWork, is set to invest USD 100 million in its Indian business as the company plans to ride out the coronavirus pandemic, which has kept people indoors, away from offices. The company's Indian franchise laid off 100 employees, 20 percent of its workforce, in May, in response to the growing global pandemic, joining a bunch of other companies attempting to cut costs in similar ways. WeWork India is aiming to use the proceeds from its first-ever fundraiser for focused growth in the Indian market, spread across the next 36 months.
WeWork India is entirely operated by Indian real estate tycoon and billionaire Jitu Virwani’s Embassy Group. Last year, the company was in talks with Indian moneylender ICICI Bank to raise USD 100 million. Talks broke down following the company's botched initial public offering. WeWork India was also in talks earlier to raise USD 200 million from new investors. “The fresh round of capital from our long-term partners at WeWork global represents a vote of confidence in our strategy and will help us serve our community better. We have enough capital for long term growth and increase the profitability of the business,” said Karan Virwani, CEO, WeWork India.
WeWork India has already proved to be profitable at the center level and aims to break even by the end of June 2020 at the company level as well. WeWork India is one of the critical markets for the parent company. The company has shifted its focus from increasing the number of desks to 90,000 by the end of 2020 to profitability. “The flexible workspace industry in India and around the world is facing its biggest challenge yet. In that, we see a new opportunity that suits our members’ evolving needs,” said Virwani.
The unprecedented COVID-19 pandemic has left companies looking for alternative options to manage cash flows by moving costs to a variable model, leading to an acceleration in the shift to flexible workspaces. This financing will support WeWork India’s long-term strategy, focused on exceptional member experience and strong financial performance at the building level.