The strategy for WeWork Inc. to exit India has now failed. The US-based coworking giant had planned to sell its entire 27% stake in its Indian unit but could not go through with it because of differences in the valuation of the business. That development comes at a time when the coworking segment in India is already on the rise, which introduces another layer of uncertainty into WeWork’s strategies.

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Focus and Reason for the Deal failing of WeWork Inc.’s

WeWork Inc. had been planning to sell its stake in WeWork India as a strategic move to sell off non-core businesses to become leaner. The proposed deal was expected to be worth around INR 1,200 crore and was to be effected in two phases. Earlier, WeWork Inc. and Embassy Group, which control the remaining 73% of WeWork India, expected to offer about 40% of the company’s stake to new investors. Nike’s stake acquisition finally got a nod from the Competition Commission of India (CCI) in June 2024.

Nonetheless, the transaction failed to work out even when it had received the green light from regulators. Insiders said that the main cause of the failure was the mismatch in the assigned share values. The plans included 27% of the stake from WeWork Inc., which has been intended by the Embassy Group to acquire and after that raise investors. However, the diversification process was affected by serious challenges including the failure of the deal due to differences in the estimation of the value of WeWork India.

Implications for WeWork India

The failure of the exit deal poses potential implications for WeWork India. The company has been good and according to the latest report, it has posted INR 831 crore revenue for the first half of the FY24 which is a 40% YoY growth. This performance points to the general rebound across the coworking subsector in India brought on by the comeback to flexible working environments after COVID-19.

Karan Virwani the international CEO of WeWork India has been keen on sourcing other investors to acquire the 27% stake that is owned by WeWork Inc. Currently, there are reports that negotiations are ongoing with 360 One which was formerly known as IIFL Wealth and Asset Management. This action is viewed as an attempt to secure the company’s ownership structure and to ensure the company’s further organic growth.

Competitive Sectors with Strong Performance in the Indian Market

The coworking segment, especially in India, has been showing signs of recovery, many players even reported good results. The major competitor of WeWork India, Awfis, floated its IPO in May 2024 and it was subscribed 108 times. This successful public offering proves more investors believe in the coworking business model.

The demand for coworking spaces has grown due to increased flexibility in working resulting from flexible working models. This development has been beneficial to many coworking operators as they keep growing their spaces due to the increased demand. Currently, WeWork India has a broad range of coworking spaces and therefore it has possibilities for expanding in this line due to the increased demand for this service. 

Conclusion

The failure of WeWork Inc. to implement the exit deal in India also highlights the potential issues and risks of operating in the coworking submarket. With Sector revival, there is a lot of strength and possibility in WeWork India. As the company looks for new investments and expands its presence on the market, it becomes a significant part of the flexible workspace industry.