Two days after WeWork India Management Ltd. launched its initial public offering (IPO), InGovern Research Services, a governance advisory firm, has raised concerns regarding the company's financial health and disclosures. The IPO aims to raise approximately ₹3,000 crore through an Offer for Sale (OFS).
Financial Concerns
InGovern's analysis points to persistent financial strain despite WeWork India's revenue growth, which saw a 22% compound annual growth rate (CAGR) between fiscal years 2023 and 2025. The firm highlights that WeWork India has consistently reported negative cash flows. Lease costs account for over 43% of the company's revenue, indicating a substantial cost burden. The reported profit in FY25 is largely attributed to a deferred tax credit, rather than actual operational profitability. Furthermore, InGovern noted repeated audit flags from FY22 to FY24 related to control weaknesses, which they say remain unaddressed.
IPO Structure and Promoter Issues
The IPO is structured as an Offer for Sale, meaning the company will not receive any fresh capital. The proceeds will go exclusively to selling shareholders, primarily Embassy Buildcon LLP and WeWork International. Approximately 45% of the issue, worth ₹1,348 crore, has already been allocated to anchor investors at the upper price band of ₹648 per share. In addition, InGovern highlighted governance concerns related to promoter share pledges. A significant portion of shares held by Embassy Buildcon was pledged pre-IPO for borrowings. Although these shares have been released, they are required to be re-pledged if the IPO listing is delayed, potentially impacting promoter control and raising investor concerns.
Impact on Investors
InGovern's report suggests that while WeWork India demonstrates strong growth potential in the co-working space, it also carries significant financial and governance risks. Investors are advised to carefully consider these concerns before subscribing to the IPO. The firm also stated that the proceeds from the IPO are "going exclusively to selling shareholders and promoters".
