Shared office space provider CoWrks will raise $350 million equity to fund domestic and foreign expansion at a time India is witnessing a boom in co-working centres across key cities, a top company executive said.
The Bengaluru-based company, backed by property developer RMZ Corp., has appointed Morgan Stanley and Bank of America Merrill Lynch for the fundraise. This is the first time that CoWrks, which has been funded by the promoters so far, is looking for external funds.
CoWrks has 23 centres across Bengaluru, Mumbai, Hyderabad, Chennai, Delhi and Gurugram and is also looking to expand into tier-II cities like Pune, Ahmedabad, Chandigarh, Indore and Jaipur, apart from overseas locations. The company is operational for two-and-half years now.
“The company has had a successful run so far and is a well-established brand. The fundraising is for the next level of growth and expansion. We are targeting both domestic and offshore investors, and it could even be a clutch of investors and not just a single one," said Abhishek Goenka, CEO, CoWrks.
CoWrks has a very deep enterprise focus and in addition to growing its existing verticals, it is also foraying into ancillary businesses such as its recently launched meeting and events platform Converge, Goenka said. Sidharth Menda, founder and vice-chairman added, “We plan to be a platform company encompassing the larger spectrum of workspace solutions for all business needs."
Co-working or flexible workspaces have had a transformational impact on office markets all over the globe in 2018. While some markets are approaching maturity, on a global level, there will be continued momentum in 2019, said Knight Frank’sGlobal Outlook-2019 report. India is no exception. In the last three years, around 350-400 operators have emerged, attracting not only startups but increasingly, large, and small and medium enterprises (SMEs) as well.
While some large operators like WeWork Companies Inc. and CoWrks have focused on key cities, others like Awfis Space Solutions Pvt. Ltd works in the value segment and also wants to capture working populations in smaller towns adjacent to metros.
The key concerns regarding shared workplace operators have been profitability and consolidation.
While WeWork India aims to turn profitable by the year-end, CoWrks makes a profit in individual centres but is yet to turn profitable at the company level. The rapid rise in the number of operators has led to the fear of many smaller operators being unable to sustain in the highly competitive business.
CoWrks is planning to more than double its centres by the end of this year.
“We have a huge pipeline. We have 23 centres right now and there are another 30 centres that we have already started talking about. By the end of the year, our target is to have about 70-75 centres. A lot of this demand is driven by large enterprises," said Menda. At present, the company has 23,000 members. It is looking to take it up to 75,000 members by year-end.
Bidya Sapam from Mumbai contributed to this story.