WeWork India likely to buy back 27% from bankrupt global business

While WeWork struggles, Indian firm's valuation has shot up

The Virwanis of the Embassy group are looking to buy back the 27 per cent stake owned by WeWork Global in WeWork India, say sources with knowledge of the discussions.

WeWork Inc recently applied for bankruptcy protection under Chapter 11 of the US Bankruptcy Code.  

The Virwanis, who run the co-working space business through the Embassy group in Bangalore, own 73 per cent stake in WeWork India, and conduct its operations independently. The joint venture with WeWork Inc allows them to use the international co-working brand name.  

An official spokesperson of WeWork India said that the Virwanis would not like to comment on the issue. 

The Virwanis tied up with WeWork Global in 2017 and they had a 100 per cent stake in WeWork India. In 2019 there were reports that WeWork would buy up to 70 per cent stake at a valuation of $2.75 billion, but this was never confirmed and nor did it materialise. 

In 2020 WeWork India was valued at $500 million and WeWork went ahead and pumped in  $100 million to pick up a 27 per cent stake in the India operations. In an interview with Business Standard in December last year, Karan Virwani founder and chief executive officer, WeWork India, had said that the Indian company could now be valued at $2 billion.

In contrast, the valuation of WeWork Inc, a company where SoftBank has a 70 per cent stake, has plunged. According to estimates, from a peak of $47 billion, it is now at $50 million. Plus, it has a staggering debt of  $4 billion.  

The Indian company, though, has been on the roll, and Virwani has said that they expect to ramp up their co-working space to over 20 million square feet BY 2028   from 6 million square feet in December last year.

Between April and September 2023, WeWork India clocked revenues of Rs 831 crore, up by more than 40 per cent over last year, and its EBIDTA was at Rs 532 crore (increased by 90 per cent over the previous year). It is planning to hit Rs 1800 crore revenue in FY24. The company is aiming to add an additional 1.5-2 million square feet co-working space in this financial year.

WeWork India currently operates in over 50 locations across seven cities in the country, with a total capacity of 6.5 million square feet. It has more than 70,000 members and 90,000 desks collectively.  And it has been profitable since 2021.  

In an official statement after WeWork Inc filed for bankruptcy in the US, the Embassy Group stated that the bankruptcy protection issue will not impact the Indian operations at all. WeWork India “operates independently of WeWork Global and our operations will not be affected in any manner,”  the statement said.

It clarified, moreover, that the company would not be part of the reorganisation process of restructuring the debts and the leases of WeWork Global in the US and Canada.

It added that WeWork India is backed by the majority stakeholder, the Embassy Group, which would continue to invest in the future of the business.

The story so far
 

2017: Embassy Group ties up with WeWork in India converting an initial lease agreement to a full-fledged partnership. Invests $25 million
 

2019: Reports come out that WeWork Global would buy 70 per cent stake for a valuation of $2.75 billion.  WeWork’s big IPO was shelved

2020: WeWork Global invests $100 million in WeWork India at a valuation of $500 million. Gets a 27% stake
 

2022: Karan Virwani says the valuation in December would be around $2 billion
 

2023: WeWork Inc files for bankruptcy protection in US and Canada