Pan-India flexible office space provider Smartworks has received investment worth Rs 175 crore from Singapore-based property company Keppel Land, which it plans to utilise for scaling up its operations across tier-1 and tier- 2 cities in the country.
“With this strategic investment by Keppel Land, we will be able to scale up even more rapidly across the country’s tier-1 and 2 cities and further invest in building up our next generation product, improving client experiences, as well as boosting our talent and technology,” Neetesh Sarda, who co-founded the company with Harish Binani in 2016, told reporters.
Much of the funds will be utilised for expansion. In the last three years, Smartworks has grown to about 2.5 million sq ft and the aim is to grow to about 5 million sq ft in the next 16-18 months, he said.
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The company is targeting to scale up to at least 35-40 centres comprising one lakh seats spread over 5 million sq ft in the next 16-18 months, Sarda added.
“Out of the 5 mn sq ft that we are aiming, approximately 1.5 million is already finalised. The additional one million plus is also within the nine cities,” he said.
“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,” Keppel Land CEO Tan Swee Yiow said.
He said there are many opportunities for cross-learning and collaboration between Smartworks and Keppel Land’s smart serviced co-office platform, KLOUD, which currently has a presence in Singapore, Vietnam and Myanmar
Asked about revenue, Binani said the company is expecting a turnover of Rs 300 crore this fiscal as against Rs 100 crore last year.
Binani said the company is already profitable at an entity level with an Ebitda (earnings before interest, tax, depreciation and amortisation) margin of 9 per cent, which he said would grow significantly this fiscal year.
Smartworks is currently present in Delhi, Noida, Gurugram, Kolkata, Bengaluru, Mumbai, Hyderabad, Chennai and Pune.
Besides expanding presence in the 9 cities, Sarda said the company would enter tier-II cities such as Bhubaneswar, Chandigarh, Ahmedabad and Coimbatore.
Smartworks is spread across 2.5 million sq ft in nine cities and 23 centres with over 400 clients. It has over 40,000 plus seats operational today. It has presence in Chennai, Pune, Kolkata, among others.
“It has been a Great Diwali for us. Our model is different from other co-working firms as we focus only on large clients, enterprises who take up much larger spaces. Our average is about 250 seats per client while the industry average could be 25 to 30 seats. We are more of a serviced office solution and we compete with traditional office spaces rather than co-working spaces,” Binani said.
Asked if the company would eventually take the IPO route, Sarda said: “It is still series A for us. Very early to say but the eventual exit is to get to that. Hopefully we will be able to achieve that in the next four to five years.”
As for the biggest challenge in today’s market, Binani said that it is do with acquiring bigger buildings.
“Our focus was to go for a strategic partner who could add value and help in our growth. At the end of the day it is a real estate play. We have also invested in robots. We have designed a robot that acts as a receptionist during the day and a cleaner in the evening. We are still testing it in Bengaluru,” added Binani.