WeWork India Said in Talks with Goldman, Warburg Pincus, GIC to Raise $200M

The Indian arm of US co-working giant WeWork is reported to be in early stage talks with investors including Goldman Sachs and Warburg Pincus to raise up to $200 million, a move that could boost WeWork India’s valuation to as much as $1 billion.

Singaporean sovereign wealth fund GIC is also said to have shown interest in the potential deal, according to an account in The Times of India recently, citing people directly aware of the matter. Manhattan-based WeWork, which is valued at $20 billion, brought its flexible office empire to India in late 2016 through a partnership with Embassy Group, giving the homegrown developer exclusive rights to operate the brand’s spaces in the country.

WeWork India currently operates 12,000 desks with a target of more than doubling that number by year-end. The company has 14 locations open or under development in Bangalore, Gurgaon and Mumbai and aims to expand into new market such as Pune, Chennai, and Hyderabad by next year.

The brand opened its first Indian co-working centre, a huge 2,200-seat facility in Bangalore in July of last year.

WeWork India Said Eyeing 10-Digit Valuation

WeWork’s India unit is controlled by Jitu Virwani, the billionaire chairman of Bangalore-based residential and commercial developer Embassy. Under the terms of the rare operating agreement with WeWork, Embassy puts up capital and handles the real estate and construction side of the business, while the US firm provides branding and office services. The unit is headed by Karan Virwani who holds the title of Director.

Investment bank JM Financial is advising Embassy on the potential fundraising, which aims for an enterprise valuation in the range of $700 million to $1 billion for the India unit, according to the newspaper account. The exact valuation would depend on how fast WeWork India scales up, with a figure of around $1 billion expected if the company manages to double its desk count by year-end.

Global Investors Circling Shared Office Behemoth

US investment bank Goldman Sachs is among WeWork’s early backers, having joined JPMorgan Chase & Co and other investors to bet $355 million on the startup in 2014. Founded in 2010, WeWork has also drawn investment from global heavyweights including Japan’s SoftBank its Vision Fund, which ploughed $4.4 billion into the company to fuel its Asian expansion last year.

Warburg Pincus has not previously invested in WeWork, but the US private equity firm has demonstrated an interest in niche real estate classes from rental housing and parking lots in China to industrial and warehousing properties in India, where an affiliate partnered with Embassy for a $250 million industrial park venture in October 2015.

The reported talks with WeWork suggest that Singapore’s GIC is mulling more exposure to the flexible office sector. The sovereign wealth fund with an estimated $359 in assets teamed up with Frasers Property Limited earlier this month to invest $177 million in Singapore-based co-working brand JustCo to build up a network of shared spaces across Southeast Asia.

WeWork India was reported last December to have raised $30 million to date, of which $5 million came from its US parent and $25 million from Embassy Group. The unit raised another $15.6 million from Embassy in January.

WeWork has an option to buy back the India business in its fifth year of operations, but the news report cites speculation that WeWork and SoftBank may be angling to take over much earlier.