Awfis went public in May, becoming the second company in the segment after EFC (I) Ltd to opt for a public share sale. Smart jobsanother flexible workspace provider, has filed preliminary documents with the Securities and Exchange Board of India (Sebi) to raise funds through an initial public offering (IPO).
Bhive and Wework India are among the other companies in this space that plan to launch IPO Soon, people who were aware said.
According to the industry report forming part of the draft red herring prospectus (DRHP) filed by Smartworks, India had a flexible workspace stock ranging between 62 million sq ft and 64 million sq ft at the end of 2023, and is projected to grow at a compound annual growth rate (CAGR) of about 17% to reach 116-118 million sq ft in tier-1 cities by 2027.
Smartworks, which recently raised ₹168 crore (around $20.24 million) from investors including Keppel Ltd, Ananta Capital Ventures Fund I, Plutus Capital and several family trusts, will invest ₹238 crore over the next three years in equipping the upcoming centres, it said. The company’s proposed initial share sale is a combination of a fresh issue of equity shares worth ₹550 crore and an offer for sale (OFS) of 67.59 lakh shares by the promoters, as per its DRHP. Smartworks may consider raising ₹110 crore through a pre-IPO placement, as per the DRHP. About ₹140 crore will be kept for repayment of loans and the remaining funds will be utilised for general corporate purposes. With a portfolio of 8 million sq ft and 180,000 seats, the company reported revenues of ₹1,039 crore in FY24, a growth of 46% over the previous year.
The demand for flexible workspaces It is primarily driven by organizations focused on using their capital more efficiently and effectively adopting hybrid and distributed work models.
According to DRHP, the top four cities (Pune, Hyderabad, Bengaluru and Mumbai) contribute 80% of the company’s revenue and if it is unable to serve retail customers in these cities due to increased competition or reduced demand, this will lead to a decline in its revenue and growth, which will have an adverse effect on its business, results of operations and financial condition.
There are over 440 flexible workspace operators in India and the top 10 by portfolio size account for nearly 60% of the total. Smartworks, WeWork India, Awfis, Table Space and Indiqube are among the most prominent.
In FY24, Smartworks expanded its presence by adding new centres including Golf View Corporate Towers in Gurgaon, Logix Cyber Park in Noida, Amar Tech Centre and 43EQ in Pune, and Olympia Pinnacle in Chennai.
The company’s portfolio also includes several large campuses such as Vaishnavi Tech Park in Bengaluru and M Agile, 43EQ and AP81 in Pune.
Since 2019, Singapore-based Keppel Ltd has been a long-standing and prominent investor in Smartworks, having invested $29 million in the company to date.
As of March 31, 2024, Smartworks had established a presence in 13 cities with a portfolio consisting of 41 centers spanning 8 million square feet.
The company has said it plans to add 3 million to 4 million square feet of flexible office space annually to meet growing demand from domestic and foreign companies.
Smartworks has the largest concentration of enterprise customers, with a total customer base of approximately 550, including Google, Accenture, Persistent systems and Samsung.
The company had previously said it might consider going public after achieving its goal of acquiring 30 million square feet of office space.
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