WeWork Inc. gets CCI approval to sell entire stake in India unit

WeWork Inc, a US-based co-working space provider, has received approval from the Competition Commission of India (CCI) to sell its entire 27.5% stake in its Indian unit.

The sale is part of a two-step process in which WeWork Inc. and WeWork India's parent company, Embassy Group, will jointly sell roughly 40% of their shares in the Indian subsidiary.

The detailed order from the CCI is awaited, which will mark WeWork Inc.'s complete withdrawal from the Indian market. 

How will the ownership structure change?

"CCI has approved the acquisition of certain share capital of WeWork India Management (WeWork India) by Real Trustee Advisory Company (Real Trustee) (in its capacity as trustee for Volrado Venture Partners Fund II (Volrado II), Volrado Venture Partners Fund III - Beta (Volrado III) and other independent co-acquirers, and 100 per cent share capital of 1 Ariel Way Tenant Limited (OAW) by Embassy Buildcon LLP," said the regulator in a press statement.

Currently, Embassy Group holds a majority stake of 72.5% in WeWork India, while the remaining 27.5% is owned by 1 Ariel Way Limited, a UK entity that is a subsidiary of WeWork Global. 

Real Trustees act as the trustee for Volrado Ventures, registered with the Securities and Exchange Board of India, while Embassy Buildcon is involved in residential and commercial real estate development.

The new ownership structure will be implemented once the sale process is completed.

Is WeWork India profitable?

Despite WeWork Inc.'s struggles in the US, which led to a Chapter 11 bankruptcy filing last November and a subsequent $4 billion debt reduction, WeWork India has been performing well.

WeWork India generated revenues of Rs 1,400 crore in FY23, with an EBITDA of Rs 250 crore and a profit after tax of approximately Rs 60 crore.

The company boasts about 90,000 desks across 54 locations in major Indian cities, with an occupancy rate of over 80%, comfortably above the breakeven occupancy rate of 57-58%.

How did WeWork Inc's bankruptcy impact the Indian unit?

WeWork Inc's bankruptcy in the US did not deter the Indian business. In June 2021, WeWork Global invested $100 million in WeWork India to acquire a 27.5% stake, helping it navigate financial challenges during the COVID-19 pandemic.

The Indian unit reported a revenue increase of 67.6% to Rs 1,314 crore in FY23, while losses decreased by 77.29% to Rs 146 crore.