Philippine Co-Working Startup Wins Backing From CIMB-Mitsubishi Fund

Filipino co-working operator KMC has won fresh financial backing from a Malaysian-Japanese investment fund, according to an announcement today by the Manila-based firm.

KMC, a unit of the company which operates property agency KMC Savills, said that it will use the cash injection from ASEAN Industrial Growth Fund (AIGF) to drive its expansion in the Philippines. Further details of the amount or nature of the investment were not provided.

The AIGF vehicle was set up in 2015 as a joint venture between Malaysian financial conglomerate CIMB Group, Japan’s Mitsubishi Corporation and the Development Bank of Japan. In 2016 the fund was reported to have paid around RM300 million ($73 million) to buy out Malaysia grocery chain Jaya Grocery, and has not previously announced investments in the shared space industry.

KMC Takes First Outside Investment

“We have been growing organically since KMC was founded and today’s announcement further cements our commitment for continued expansion throughout the Philippines,” Michael McCullough, Managing Director and Co-Founder of KMC said in the statement. “We are in a leading position to support the increasing number of startups, multinationals, and IT-BPO players who prefer beautifully designed workspaces and flexible lease terms.”

Early last month KMC opened its 36^th venue at Filinvest City in the Alabang area of Muntinlupa City in Metro Manila. That centre was KMC’s fifth opening of the year after unveiling two locations each in Ortigas and Makati since January 1^st. At the time the company said it would add 4,000 new desks in 2019 or about 20,000 square metres (215,278 square feet) of office space.

Now nine years old, KMC counts 13,000 members across 21 locations of its flexible office operation in Metro Manila, Cebu and Iloilo, according to the company, which said that the new investment would help it to meet its 2019 growth targets. KMC points to its ability to offer ancillary services, including HR and payroll management as among its selling points, with the company also promoting staff leasing, particularly targetting business process outsourcing, among its services.

International Players Check into Filipino Flexible Office Market

Grade A office rental costs in Manila averaged $35 per square foot per year at the end of 2018, according to JLL research, making the Filipino capital one of the cheapest locations to secure office space after Chengdu, in China’s Sichuan province, where rates averaged $40 per square foot and Bangkok where costs hovered around $42 per square foot.

Those rates are around 10 percent of average costs in Hong Kong’s Central district, which averaged $338 per square foot or even Beijing, where average rates were $153 per square foot at the end of last year.

With rents low, international co-working providers have not tripped over themselves to enter the Pinoy market.

WeWork opened the doors to its first Filipino centre in mid-March of this year, and Singapore’s JustCo has announced plans to open in the country this year. Ayala Land, the Philippines biggest developer, has launched its own Clock In flexible office brand, with plans to expand beyond its existing three locations.