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Business News/ Markets / Ipo/  Awfis Space IPO Day 3: From financials to key risks, here are 10 key things to know from RHP before investing
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Awfis Space IPO Day 3: From financials to key risks, here are 10 key things to know from RHP before investing

Awfis Space Solutions IPO: Awfis Space Solutions compares its business model with unlisted companies like We Work, Cowrks, Smartworks, and Tablespace, offering flexible workspace solutions in India for individuals, start-ups, SMEs, and major corporations.

Awfis Space Solutions IPO is scheduled to open on Wednesday, May 22, and close on Monday, May 27. (https://www.awfis.com/)Premium
Awfis Space Solutions IPO is scheduled to open on Wednesday, May 22, and close on Monday, May 27. (https://www.awfis.com/)

The Awfis Space Solutions IPO opened on Wednesday, May 22, and will close on Monday, May 27. The initial public offer of co-working space operator Awfis Space Solutions received 5.49 times subscription on the thrid day of bidding today, at 10:57 IST, as per BSE data. 

The Awfis Space Solutions IPO attracted a lot of retail interest on its second day of the bidding process, which began on Wednesday, May 22. Awfis Space Solutions IPO subscription status was 4.28 times, as per BSE data.

The retail portion has been subscribed 12.27 times, while the non-institutional investors quota has received 6.82 times subscription. Qualified institutional buyers part has fetched 32% subscription. The employee portion has been booked 6.81 times.

Also Read: Awfis Space Solutions IPO Day 3: Check latest GMP, subscription status. Should you apply?

The Awfis Space Solutions Limited IPO price band has been fixed in the range of 364 to 383 per equity share of the face value of 10. The offer is being made through the book building process, with qualified institutional buyers (QIBs) getting 75% of the net offer, non-institutional buyers reserving 15% of the net offer, and retail buyers reserving no more than 10%. Employees bidding in the employee reserve segment are eligible for a discount of 36 per equity share. The employee reservation portion has equity shares aggregating up to 2 crore.

The company offers a wide range of flexible workspace solutions, from individual flexible desk requirements to tailored office spaces for start-ups, small and medium companies (SMEs), major organisations, and multinational corporations.

The company's flexible workplace solutions cater to a wide range of seat cohorts, from a single seat to several seats, and may be rented by clients for periods ranging from an hour to several years. Over time, the firm has transformed from a co-working environment to an integrated workspace solutions platform.

Also Read: Awfis, TBO Tek get SEBI nod for IPOs; companies plan to raise 160 crore and 400 crore, respectively

Awfis Space Solutions IPO issue size comprises of a fresh issue of 128 crore and an offer-for-sale (OFS) of up to 12,295,699 equity shares of a face value of 10 each by the promoter selling shareholder, Peak XV Partners Investments V (formerly known as SCI Investments V), offloading up to 6,615,586 equity shares; other selling shareholders, Bisque Ltd, who intends to sell up to 5,594,912 equity shares; and Link Investment Trust, who is likely to sell up to 85,201 equity shares, as per the RHP.

The company intends to use the net proceeds to fund the following objectives: capital expenditure for the establishment of new centres (42.03 crore); working capital requirements (54.37 crore); and general corporate purposes.

Here are 10 key things from the Red Herring Prospectus (RHP) that investors might want to know before subscribing to the issue.

Awfis Space Solutions IPO Promoters

The company's promoters include Amit Ramani, an individual promoter, and Peak XV, a promoter selling shareholder. As of the date of this Red Herring Prospectus (May 14), the promoters together held 27,444,403 equity shares, representing 41.05% of their company's pre-Offer issued, subscribed, and paid-up equity share capital on a fully diluted basis.

Awfis Space Solutions IPO Shareholders

The amendment agreement dated May 1, 2024 for amending the Shareholders’ Agreement executed by and amongst the Company; Peak XV, Bisque Limited, Link Investment Trust, Ashish Kacholia, QRG Investments and Holdings Limited, Rajesh Kumar Gupta, Rajiv Goel, Ramesh Kumar Sharma, VBAP Holdings Private Limited, Karmav Real Estate Holdings LLP, Emerge Capital Opportunities Scheme, Arjun Bhartia and Ashutosh Bihani; Madhu Jain, Ashish Rathi, Incipience Dealers LLP, M/s. Samedh Trinity Partners, Tarun Khanna, Saurabh Gupta and Amit Ramani.

As of the date of this Red Herring Prospectus, the company has 28 equity shareholders. The following is a list of their significant shareholders, together with the quantity of equity shares they hold:

Awfis Space Solutions IPO Shareholders
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Awfis Space Solutions IPO Shareholders (RHP)

Awfis Space Solutions IPO Peers

The company noted that, with the implementation of the MA model, it thinks there are no listed companies of equal scale and business model in India or elsewhere that are equivalent to itsbusiness. Nonetheless have included comparisons to unlisted companies such as We Work, Cowrks, Smartworks, and Tablespace.

Also Read: Go Digit IPO retail portion fully booked within hours of opening, issue subscribed 23% so far; check GMP

Awfis Space Solutions Model details

The company adopted two differentiated models for sourcing and procuring workspaces, namely the straight lease (SL) model and the managed aggregation (MA) model.

The SL model involves developers or space owners leasing space to flexible workspace operators on traditional leases with typical market terms and conditions, such as a fixed monthly rental, common area maintenance charges, security deposit, minimum lock-in period, lease tenure, and escalations. They bear the whole capital investment for fitting out the property.

Under MA Model, there are no listed companies of equal size and business model in India or elsewhere that are equivalent to theirs. Under the MA model, developers or space owners may incur capital expenditure on fit-out, in part or in full, with the remainder borne by the operator (if any), depending on other terms of the MA model, often foregoing a fixed rental for a component of minimum guarantee on a case-by-case basis and may take up a share of the revenue/profit on pre-negotiated terms, according to the CBRE Report.

Awfis Space Solutions IPO business

Awfis Space Solutions Limited, founded in December 2014, provides workplace solutions in India.

The company provides a variety of flexible workspace options to meet the demands of individuals, start-ups, SMEs, and major corporations.

The company's primary offering is co-working, which includes flexible workplaces, specialised office spaces, and mobility solutions. Awfis Space Solutions Limited also offers support services such as food and drinks, IT assistance, infrastructure, and event hosting.

As of December 31, 2023, the firm operated 169 facilities in 16 cities throughout India, totalling 105,258 seats and a chargeable area of 5.33 million square feet. Furthermore, 31 centres with 25,312 seats are now being fitted out, with a billable area of 1.23 million square feet.

Awfis Space Solutions market 

The firm believes it is well positioned to benefit from such developments because of its capacity to deliver flexible workplaces across its network in Tier 1 cities, as well as the strategic advantage gained from its early concentration on Tier 2 locations.

Their existing network, which spans nine Tier 1 and seven Tier 2 cities, serves as a basis for them to develop into other areas more economically and efficiently. The firm intends to grow its network in high-demand micro-markets inside these Tier 1 cities, therefore strengthening its position in these areas. They have also selected more Tier 2 cities, such as Lucknow, Guwahati, and Vijayawada, to join in the near future.

Also Read: Go Digit General Insurance Limited IPO: 10 key risks investors should know before subscribing to the issue

Awfis Space Solutions IPO industry

The Indian office market is estimated to increase at a CAGR of 6.3% between 2023 and 2026. According to the CBRE Report, India's commercial Tier 1 office stock will reach 832 million square feet on December 31, 2023. Furthermore, the unstructured commercial office stock in Tier 1 cities is anticipated to be between 600 and 730 million square feet (depending on the average work desk space occupied per person) as of December 31, 2023.

Awfis Space Solutions IPO financials

Awfis Space Solutions Limited's revenue climbed by 103% and profit after tax (PAT) increased by 18.4% during the fiscal years ended March 31, 2023 and March 31, 2022.

Awfis Space Solutions IPO - key risks

Some of the key risks are as follows;

  • The company's history includes net losses, negative earnings per share ("EPS"), and a return on net worth ("RoNW"). To achieve profitability, the firm must create and sustain higher revenues while managing costs, and failure to do so may have a negative impact on their business, operating performance, cash flows, and financial condition.
  • The firm is exposed to risks inherent in the SL model that we may not be able to avoid, and as a result, its business, operating results, cash flows, and financial condition may suffer.

Lock-in of equity shares allotted to anchor investors

50% of the equity shares offered to anchor investors under the anchor investor component will be locked in for 90 days from the date of allotment, while the remaining 50% will be locked in for 30 days.

Also Read: Virat Kohli, Anushka-backed Go Digit IPO opens. How much celebrity couple earn?

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.

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Published: 15 May 2024, 04:18 PM IST
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