Co-working spaces attract PE funds

17 October 2017

Co-working spaces attract PE funds

  • The Hindu Business Line

In April, Awfis, the country’s largest co-working space provider, announced that it has raised $20 million (₹130 crore) from Sequoia Capital. This, so far, has been the biggest fund-raising in the segment.

Co-working spaces — where professionals of multiple companies operate simultaneously — has seen a rise in the country.

And if market sources are to be believed, the number of such space providers has jumped 400 per cent to 350 till FY17, from just 80 in FY16. PE firms are also said to be evincing interest in the segment.

According to Neetish Sarda, Managing Director, Smartworks, the second largest co working space provider, his company is also in talks with PE funds for raising capital to fund expansion. “Ideally, we would look at raising ₹100 crore plus. Apart from the capital, PE funds would also bring in expertise,” he told BusinessLine.

Growing market

A report by real estate consultant firm CBRE says the co-working space in India is expected to touch 10 million sq ft by 2020, with 2017 witnessing absorption of nearly 1.5 million sq ft.

“Leasing activity by shared office operators more than tripled in 2016 to 0.7 million sq ft as compared to 2014 (when it was a little over 0.2 million sq ft),” the report mentioned.

Delhi-headquartered Awfis Space Solutions and Kolkata-based Smart Work Business Centre Pvt Ltd control nearly 70 per cent of the co-working space market in the country, sources said.

Spaces are primarily spread across cities like Hyderabad, Pune, Bengaluru, Mumbai, Noida, Kolkata and Gurgaon.

Global players are also showing interest in this segment with American co-working space company WeWork — the eighth most valuable global start-up — entering India by taking up spaces in Mumbai and Bengaluru.

Expansion mode

Flush with funds, Awfis now plans to expand to Chennai by December while it will also explore smaller Tier-II cities like Jaipur, Chandigarh and Indore. It already has one million sq ft of space.

According to Amit Ramani, Founder and CEO, the plan is to take it up to two million sq ft by March 2018 and to 3.5 million sq ft by December 2018.

Kolkata-based Smartworks has around 450,000 sq ft. It plans to add another 250,000 sq ft of space focussing on Hyderabad and Chennai by the end of this year, apart from adding new spaces in cities where it is already present.

It will also explore Tier-II cities like Bhubaneshwar, Chandigarh, Coimbatore and Ahmedabad. “By the end of this fiscal, we will look to have 1.2 million sq ft of space,” Smartworks’ Sarda said.

Typically, a co-working space provider leases an office space and rents it out, charging according to the number of desks and hours used. But newer revenue models are also being explored. For example, community-based offerings, canteen services and office rewards programmes are being considered.

The other way could be to provide convenience services or have tie-ups with other companies and get facilities at a discount like tying up with a PC maker (who is also a tenant) to provide desktops / laptops for the office and so on.


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Awfis turns profitable, set to expand to 5 more cities

18 March 2019

Awfis turns profitable, set to expand to 5 more cities

  • Posted by Awfis Editorial

Awfis, the co-working spaces and solutions provider, has turned profitable in little over three years since its commencement .

The company, which could be considered a startup, has grown to 30,000 seats across 10 metros and cities with 63 centres up from 3,000. It is now looking at entering five more cities with its co-working spaces.

Amit Ramani, Founder and CEO of Awfis, said, “Awfis spaces and ‘Autonomous Work Space solutions’ have been now operational across 10 major metros and cities and we are looking at making entry into five Tier II cities during the year.”

These cities include Indore, Ahmedabad, Bhubaneshwar, Kochi and Jaipur. This will enable us to take our presence to 15 cities with over 100 centres with total seating capacity of 60,000 seats, he said.

Explaining how the company, which employs about 210 people, is working towards its growth plans, Ramani told BusinessLine, “We have turned profitable and expect to close the current financial year with revenues of ₹160 crore up from ₹1.2 crore, ₹18 crore and ₹56 crore respectively over the past four years. And we are on course for a turnover of over ₹200 crore logging about ₹17 crore per month.”

“Our plans is to grow the business at a rapid pace and take the company to an IPO within the next three years,” he explained.

Mentioning about its Autonomous Work Space Solutions, Ramani said “a registered user can check into and walk out of a workspace without any human interface and carry out his business. By simplifying processes, we have acquired a strong customer base which includes the likes of Amazon and Microsoft among 1700 other companies and firms.”

In India co-working space is poised for growth and the enormous opportunities it presents Awfis will enable us to consolidate and expand at a rapid pace. We had raised over $ 51 million and the growth momentum continues, he said.

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Co-working spaces major Awfis to double seats to 50,000 by July

01 November 2018

Co-working spaces major Awfis to double seats to 50,000 by July

  • Posted by Awfis Editorial

Co-working space major Awfis is on a rapid expansion mode and now plans to double its seats from 25,000 and 55 centres to 50,000 and 100 centres by June-July 2019.

The workspaces provider has grown from its first facility three years ago to 25,000 seats, about five months ahead of its its initial planned March 2019 date, and is now looking at doubling the number each passing year.

Amit Ramani, Chief Executive Officer, Awfis, said, “We have scaled up to 25,000 seats across 55 centres from 5,800 seats in 20 centres in July 2017. Our network, which includes start-ups, small and medium enterprises and leading corporate entities such as Hinduja, Vodafone, Mercedes Benz, and Hitachi, continues to expand.”

Earlier this year, Awfis had raised $20 million in Series C funding from Sequoia India and Innoven Capital and The Three Sisters: Institutional Office TTS:IO led by Radha Kapoor Khanna. with the $20 million Series B funding from Sequoia, the overall funding exceeds $50 million.

Win-win situation

The co-working space as a category has been growing at a rapid pace as it is able to transform under-utilised real estate assets, including spaces in malls and some hospitality projects into efficient work spaces for entrepreneurs and corporate clients. This is a win-win situation for the real estate owner, for Awfis as also for those who take up space.

By 2020, Awfis is looking at 1,00,000 seats and taking this number up to 2,00,000 seats with 400 plus centres a year thereafter. The industry now estimated to be worth about $600 million is projected to grow to $2.2 billion by 2022, thereby offering immense scope for a services provider like Awfis.

The demand is coming not just from micro-markets in large metros and major cities but from a number of Tier II cities, where there is untapped demand.

Over the last 12 months a about 80 per cent of the business has come from small and medium enterprises and corporate entities. This trend is expected to continue, with start ups too accounting for a growing numbers, Ramani said.

Mentioning that they had raised more than $50 million, the funding available and the realty share model with owners will enable to to meet immediate expansion plans, Ramani said that “Last fiscal, we closed with a turnover of ₹55 crore and this fiscal is likely to see a turnover of ₹170 crore.”

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Awfis taking its co-working spaces to small towns, malls

06 September 2018

Awfis taking its co-working spaces to small towns, malls

  • Posted by Awfis Editorial

Co-working space provider Awfis is eyeing expansion into Tier-II towns and consolidating its presence in Tier-I cities.
But it is not just office spaces that the company is planning to tap.
Awfis will also utilise commercial spaces such as shopping malls, hotels and other unconventional asset classes as co-working spaces. Low rentals are one prime reason for the company to explore these alternatives, sources said.
Some of the Tier-II towns it is currently eyeing include Kochi, Jaipur, Bhubaneshwar, Ahmedabad and Indore.
According to Amit Ramani, CEO & Founder, Awfis is planning a 60 per cent increase in seats to 40,000 over the next 10-12 months spread across 100 centres.
Its current capacity stands at 25,000 seats, about 1.5 million sq ft, across 55 centres, which makes it the largest in the country.
“Commercial office spaces apart, we are also looking at idle capacities in unconventional asset classes like a shopping mall or hotel or even educational institutions where co-working spaces can come up,” he told BusinessLine.
Ideally, the company would look at taking up 25,000 sq ft, accommodating 500 seats and other facilities like cafeteria and meeting rooms. Awfis either leases space or opts for a managed aggregator model. Upcoming spaces will mostly focus on the managed aggregator model that includes rent-sharing JVs or management contracts.
“We are in discussions with some of the landlords who own such unconventional assets for conversion,” Ramani said.
Co-working space is expected to be a $2.2-billion market in India by 2022.

Unconventional assets
Awfis has already established a presence in malls that have seen a dip in footfalls and have under-utilised spaces, such as the top floors. It has set up co-working offices at Ambience Mall in Gurugram, Raghuleela and Heera Panna malls in Mumbai, and Nucleus mall in Pune.
It also has a presence at the Taj Deccan hotel in Hyderabad and at the DERBI Foundation, Dayanand Sagar University in Bengaluru. Approximately, 10 per cent (or 2,500) of its 25,000 seats are located in such unconventional assets.

The co-working space provider reported revenues of₹57 crore in FY18 with 85 per cent coming from primary activities such as seat rentals, meeting room facilities and parking space rentals. The remaining comes from canteen and catering services.
It is expecting a three-fold jump in revenues to ₹170 crore by the end of this fiscal (FY19). The company is expecting to report net profits (at a company level) from October onwards.
“Of the 55-odd centres that we have, 42-47 are profitable,” Ramani said.

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