WeWork may revisit IPO plan only after turning profitable, says CEO Mathrani
- Low occupancy levels remain a key concern for shared workspace operators as companies allowed employees to continue working from home.
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Bengaluru: Shared workspace provider WeWork may revisit its plan for an initial public offering (IPO), but only after it reaches its target to turn profitable in 2021, said a top global executive.
Low occupancy levels remain a key concern for shared workspace operators, as companies allowed employees to continue working from home. For WeWork, signing new leases and growing occupancy levels will be the focus areas, apart from its larger goal to achieve profitable growth.
“I’m a big believer in one step at a time so let’s hit profitable growth first, and we’ll then revisit the IPO plan. The key focus right now is scaling memberships. It’s an occupancy game at this state,” Sandeep Mathrani, CEO, WeWork, said to select media in India on Wednesday.
The IPO, when it happens, will see the New York-based startup’s units and franchisees globally roll into the parent as per existing agreements.
However, the company, which had around 66% occupancy before covid-19 hit, will only reach that level next year, he said.
Mathrani, who joined WeWork in February and is perceived as a hands-on CEO, was brought in at a critical juncture as it sought to turn around and rebuild the company after a failed attempt to launch an IPO and the sudden exit of co-founder and former CEO Adam Neumann.
Earlier this month, Fitch Ratings downgraded WeWork and warned that it could default on its debt obligations.
Profitability for both WeWork and its India unit have been delayed due to the pandemic-led disruption of the business in general, but Mathrani said that the firm is on the path to achieve the milestone and produce free cash flow next year.
In the last few months, WeWork has taken various steps to rightsize the organization after letting go of many employees which led to savings of around $1 billion. It is also in process to streamline its real estate portfolio, make operations more effective and sell its non-core businesses to contain cash burn.
WeWork’s business has recovered faster and is almost fully back in certain Asian markets such as China, Singapore, South Korea and New Zealand.
While India is still a small part of WeWork’s global revenue base, the business is expected to pick up as enterprises look at flexible workspaces as the future.
The parent recently infused $100 million into WeWork India and Mathrani joined the board of the Indian arm when the company seeks to tide over the covid-induced disruptions and become profitable.
“We are seeing large enterprises approaching us. There is a mindset change in traditional companies and they are looking at flexible space. Our leasing of space to enterprises has shot up from 50% to 60-67% in recent times,” said Karan Virwani, CEO, WeWork India.
WeWork India has signed multiple lease deals with enterprise clients across cities in recent months to offer more flexible options and value offerings, including on-demand access to space on hourly or half-hourly basis.
Mathrani said he ends up chatting with Neumann often enough, “maybe a couple of times a month.”
“We talk about the business. He wants to know what I am doing. He (Neumann) did disrupt the office space,” he said.
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Business NewsCompaniesNewsWeWork may revisit IPO plan only after turning profitable, says CEO Mathrani
First Published:29 Oct 2020, 03:36 PM IST
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