WeWork announces $150m deal with Indian office developer
WeWork is entering into an 'operating agreement' with India's Embassy Group to build a six-million square foot network of office space, starting in 2017 with locations in Bangalore, Mumbai, and the National Capital Region. Embassy, led by billionaire businessman Jitu Virwani will invest around $150m in WeWork India, and private equity firm Blackstone Group is reportedly also set to invest. The rising trend of independent professionals in India has prompted a surge in demand for flexible workspace.
Bengaluru: WeWork , one of the top ten most valued startups globally, is entering India through an ‘operating agreement’ with Embassy Group, a leading office space developer in the country. New York-based WeWork, a tech-enabled platform offering collaborative office services for entrepreneurs and small businesses, plans to build a 6-million-sqft network over the next five years, beginning with Bengaluru, Mumbai and National Capital Region early next calendar.The billionaire Jitu Virwani-led Embassy will operate WeWork drawing upon the latter’s technology, design and global network of communities, sources directly aware of the matter said. Co-founded by Adam Neumann and Miguel McKelvey, WeWork will have broad representation and will receive royalty payments for providing knowhow to the local partner in the world’s fastest growing major economy. The Bengaluru-headquartered Embassy will invest around $150 million in WeWork India, which is also likely to receive investments from private equity giant Blackstone Group, sources added.The 24-year-old Embassy scion Karan Virwani is expected to lead WeWork along with a team of industry veterans who are expected to join soon.WeWork is entering India at a time when community (or collaborative) office spaces are becoming popular with the number of independent professionals among the urban workforce rising rapidly. Independently working millennials — those who are starting up or working with small, emerging businesses — are redefining the office space market. WeWork, last valued at $16 billion, had initially explored the option of entering India on its own but decided on inducting a local partner given the unstructured real estate industry in one of the potentially largest markets.WeWork and Embassy have agreed on a definitive deal and a formal announcement is awaiting “pending business procedures”. WeWork, Embassy and Blackstone declined to comment on the report.The 6-year-old WeWork is considered the fastest growing office tenant in New York and London and counts JP Morgan, Fidelity Investments and T Rowe Price among its marquee list of investors. It has raised about $1.4 billion till date. The company’s current community network consists 95 locations in 21 countries with 70,000 members across the US, Europe and Israel. It recently forayed into Asian markets beginning with Shanghai, Hong Kong and Seoul earlier this year.WeWork is expected to focus on the country’s top five-six cities in the initial years, with the launch phase itself involving half-a-million sqft community working spaces in Bengaluru, Mumbai and NCR. Each WeWork centre will be in the 1-1.5 lakh sqft range in high-visible and ready-to-occupy locations as the company gears up for an accelerated growth here. The agreement suggests that Embassy will bring in capital and real estate, while WeWork is offering digital tools, design and access to its global ecosystem.WeWork co-founder Neumann was among the star attractions at Prime Minister Narendra Modi’s startup event in January this year. Neumann considers WeWork a ‘platform for creators’ which should resonate well in a country with a huge number of millennials and high entrepreneurial energy. India’s shared offices or community working market is still nascent with just 60 such spaces operational currently.