InGovern flags legal, financial concerns with WeWork India amid firm’s sluggish IPO response

Mumbai, Oct 7 Workspace solutions provider WeWork India Management Limited is facing a muted investor response for its Rs 3,000-crore initial public offering (IPO), amid concerns raised by governance advisory firm InGovern Research Services Private over its weak financials, legal troubles involving promoters, and heavy reliance on the WeWork Global brand.

According to NSE data, the IPO -- which closes for subscription today -- has been subscribed only 16 per cent while writing the article.

Retail investors have subscribed just 46 per cent of their quota, while non-institutional investors and qualified institutional buyers have booked 8 per cent and 9 per cent, respectively.

The sentiment remains sluggish even in the grey market, where shares are trading flat around Rs 648 -- the upper end of the price band -- with no grey market premium (GMP).

In a detailed report, InGovern Research said that investors should stay cautious about WeWork India due to its poor financial performance and ongoing legal proceedings against its promoters, Jitendra Virwani and Karan Virwani.

The firm highlighted that all IPO proceeds will go to selling shareholders and promoters, meaning no new capital will be infused into the company for growth or debt reduction.

The proxy advisory firm noted that WeWork India has been reporting consistent losses, negative cash flows, and high lease costs, which consume over 43 per cent of its revenues.

As of March 31, 2024, the company had a negative net worth of Rs 437.4 crore, and its reported net profit for FY25 was largely due to a deferred tax credit of Rs 286 crore, rather than any operational turnaround.

InGovern also pointed out that the company’s occupancy levels lag behind peers -- reflecting weaker demand recovery and asset utilisation.

Adding to investor worries are ongoing criminal cases against the promoters for alleged offences such as criminal conspiracy, cheating, breach of trust, and money laundering.

Further, a writ petition filed in the Bombay High Court by investor Vinay Bansal has alleged that WeWork India’s draft red herring prospectus contains misleading information and omits crucial details -- including a chargesheet filed against its promoters for serious economic offences.

The report also underlined that WeWork India’s operations depend heavily on a 99-year license with WeWork Global, making it vulnerable to brand and compliance risks.

Any disruption in access to WeWork’s platforms or changes in intellectual property ownership following the recent restructuring of the US-based parent could affect the company’s operations.

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