The funding comes at a time when the Indian entity was finding it difficult to raise funds of about $200 million and sell a minority stake. It was in talks with investors and banks since October but faced hurdles as the mood around the co-working industry turned sour after the botched efforts of WeWork to go public following a tepid investor response and a crash in its valuation. Subsequently, founder Adam Neumann stepped down, and prime backer SoftBank came in with fresh funds to rescue it from going bust.
“The flexible workspace industry in India and around the world is facing its biggest challenge yet. 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,” Karan Virwani, CEO, WeWork India, said.
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WeWork has a management agreement with its India affiliate, which is run by Jitu Virwani’s Embassy under which the building owner funds all capital expenditures to build out the space as per specifications and maintains full responsibility for the space, while the parent acts as the manager and receives an agreed-upon management fee.
India is an important market for WeWork and is on track to be one of the major markets after US and Europe to turn profitable, Virwani told TOI in February. WeWork has about 52,000 seats in 37 centres across 7 cities in India, according to its website.
“WeWork India’s financial performance has shown consistent growth, and with the fundamentals in place at a building level backed by the expertise of the Embassy Group, we believe the WeWork India business has the ability to be our growth vehicle and provide our members an exceptional experience,” Sandeep Mathrani, CEO of WeWork, said.
Co-working companies are betting on the fact that the pandemic will make offices take up more flexible workspaces to conserve cash. WeWork has been focusing on profitability by slowing down its heady growth rates of leasing new buildings, reduces capital expenditure and even sign longer term agreements with enterprises, which takes up more than 50% of its desks.