BENGALURU: WeWork India is planning to go slower on its investments than previously planned and is looking to turn profitable by October this year The local affiliate of the global coworking venture started operations a little more than three years ago.
CEO Karan Virwani said the company has gone considerably slow in signing lease agreements for new buildings after September, when it had to withdraw its IPO following tepid investor response and a crash in its valuation. “We signed leases for 25,000 seats last year and this year it will roughly be the same number; so yes, we have gone slower in signing leases,” he said. That will make the company miss its target of having 100,000 desks by 2020, something it declared as recently as October.
WeWork now has about 52,000 seats in 37 centres across seven cities in India. “While we will grow at a rate faster than the industry, it will be a sustainable one rather than growth at all costs,” Virwani said, adding that India will be one of the major markets after Europe and the US to turn profitable.
In India, WeWork has a management agreement with its India affiliate, which is run by Jitu Virwani’s Embassy Group. Under the agreement, the building owner funds all capital expenditures to build out the space according to specifications and maintains full responsibility for the space, while WeWork acts as the manager and receives an agreedupon management fee. The parent company appointed real estate veteran Sandeep Mathrani as CEO earlier this month, a move seen as an effort to position itself as a real estate player focused on leasing office desks rather than a technology startup based on the shared economy principle. WeWork India has been looking for an investor to raise about $200 million and sell a minority stake. Talks have been on for the past few months. Virwani said it is taking longer than previously thought because fund-raising has become a challenge.
February 21, 2020
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