BENGALURU : Singapore’s Keppel Land Ltd has invested $25 million in Smartworks Coworking Space Pvt. Ltd, a flexible office space solutions provider, going against the grain of investors who are wary about committing capital to co-working operators after New York-based WeWork’s failure to pull off a share sale.
Smartworks, which has sold a minority stake to Keppel Land, plans to use the capital to grow in the nine cities it operates in, and make inroads into smaller cities such as Coimbatore, Ahmedabad, Bhubaneshwar and Chandigarh, said Smartworks founder Neetish Sarda.
The firm has 23 operational centres with 43,000 workstations and plans to scale up to 90,000-100,000 over the next 15-18 months. “The flexible space segment in India has been growing rapidly and Smartworks has been an active participant in this business over the past three years, with a large and widespread network across nine cities. Smartworks is also already cash flow positive and is profitable at a consolidated level,” he added.
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Sarda said Smartworks has an edge over rivals as it focuses almost entirely on enterprises, which account for 90% of its revenue. The company leases out large spaces to them.
So far, co-working firms have largely been self-funded, with some external investments, creating 350-400 operators of different sizes offering products at varying price points. The next phase of growth and survival will depend on the capital they raise, operational efficiency and investor confidence.
Tan Swee Yiow, CEO, Keppel Land, said in a statement: “Smartworks’ innovative business model, coupled with its strong knowledge of the Indian enterprise office segment and execution abilities, is highly scalable and relevant, particularly in India’s growing market for commercial office spaces. This investment allows Keppel Land to enter one of the world’s fastest-growing flexible office markets, opening doors for further growth through this collaboration.”
“There are many opportunities for cross-learning and collaboration between Smartworks and Keppel Land’s smart serviced co-office platform, KLOUD, which currently has presence in Singapore, Vietnam and Myanmar,” Yiow added.
After the WeWork fiasco, which included the postponement of its initial public offering (IPO), followed by the replacement of its co-founder Adam Neumann by two co-chief executives, and SoftBank acquiring a majority stake, the sustainability of co-working businesses is being questioned. Despite the negativities, globally, larger and strong players in India have been growing and raising capital. This year, Awfis raised a $30-million Series D round led by ChrysCapital, while CoWrks is planning to raise $50 million. WeWork India, the Indian affiliate of New York-based co-working startup We Co, plans to raise $200 million for growth as demand soars for shared workspaces in the country.