Awfis Space Solutions announced an IPO price band of Rs 364-383 per share, aiming to raise to Rs 599 crore. The first Indian coworking provider to go public, Awfis plans to use the funds to expand into tier-1 and tier-2 cities. The company reported Rs 616 crore revenue for nine months ending December 2023.
Flexible workspace solutions provider Awfis Space Solutions has announced a price band of Rs 364-383 per share for its initial public offering (IPO), set to launch on May 22. This IPO, the first by an Indian coworking services provider, is expected to raise between Rs 576 crore and Rs 599 crore.
Financial Performance and Strategy
Awfis reported operating revenue of Rs 616 crore for the nine months ending December 2023, a significant increase from Rs 545 crore in the fiscal year ending March 2023. Despite a net loss of Rs 18.9 crore for the April-December 2023 period, the company is cash-flow optimistic, with an EBIT of Rs 67 crore. “At EBIT level, we’re at Rs 67 crore and at EBITDA level we’re Rs 195 crore for the nine-month period, which is positive,” said founder and managing director Amit Ramani.
IPO Details and Stake Sales
The IPO aims to raise Rs 128 crore in fresh capital. Peak XV Partners and private equity firm ChrysCapital will also offer 12.3 million shares for sale. Post-IPO, Peak XV Partners and ChrysCapital are expected to hold stakes of 10-11% and 13-14%, respectively. Previously, Awfis had planned to raise Rs 160 crore in fresh capital but adjusted the issue size to comply with guidelines requiring promoters to maintain about 20% of post-issue capital for an 18-month lock-in period.
Business Model and Market Position
Awfis distinguishes itself through a managed aggregation model, partnering with landlords for about 66% of its spaces, which helps mitigate the capital-intensive nature of the business. “We have a pole position and we service the mass market. Every competitor has a different price band where they sell, and India is an under-commercialized fast-growing market,” Ramani explained.
The Indian coworking market remains robust, with significant demand following the pandemic. “The shift in work dynamics after Covid-19 has favored coworking space providers, as companies encourage employees to return to offices,” Ramani noted. Over 65% of Awfis’ demand now comes from large enterprises, a significant change from the pre-pandemic period when less than 50% of demand was from large companies.
Expansion Plans
Post-IPO, Awfis plans to expand further into tier-1 and tier-2 cities, targeting locations such as Guwahati, Vijayawada, and Lucknow. This will increase its market presence to 19 cities. As of December 31, Awfis operates in 16 cities with 138 centers, 81,433 seats, and a chargeable area of 4.10 million square feet.
Market Dynamics
Awfis’ growth strategy contrasts with that of US-based coworking company WeWork Inc., which has exited its operations in India. Despite WeWork’s challenges, India’s demand for coworking space remains strong. “The Indian coworking market is large enough for multiple players to thrive, each with its unique business models,” Ramani said.
Awfis aims to capitalize on this growing demand by leveraging its unique business model and strategic expansion plans. With the upcoming IPO, the company is well-positioned to drive future growth and reinforce its market leadership in the flexible workspace industry.
