Flexible workspace solutions company Awfis Space Solutions is all set for its IPO debut on May 22, and the subscription window for the same will close on May 27. The company’s share price is fixed between Rs 364 and Rs 383 per share.
Awfis Space Solutions' initial public offering (IPO) consists of an offer-for-sale (OFS) of up to 1,22,95,699 equity shares, valued at Rs 490.72 crore, as well as a new share sale of Rs 128 crore. The company plans to raise a sum of Rs 598.72 crore in the higher range of the price band.
The promoters of the company include Peak XV, a promoter selling shareholder, and individual promoter Amit Ramani. Together, the promoters possessed 27,444,403 equity shares as of May 14, the date of this Red Herring Prospectus. This amount represented 41.05 per cent of the company's fully diluted equity share capital that had been issued, subscribed for, and paid up prior to the offer.
Awfis’s investors wanted to sell 10 million shares as part of an earlier intention to issue fresh shares worth Rs 160 crore.
However, they had to change the number of new shares they were selling because of a rule saying the owners must keep at least 20 per cent of the company's shares for about 18 months after the sale. So, they reduced the number of new shares to follow that rule.
Under the revised offering, Peak XV Partners wants to sell the most shares at 6.6 million. Link Investment Trust will divest up to 85,000 shares, and Bisque Limited will sell up to 5.5 million shares through the OFS. The company says that it will use the net proceeds from the funding to expand new centers, focus on working capital requirements, and general corporate purposes.
During an IPO conference in Mumbai, Amit Ramani, the founder of Awfis Space, said that they want to expand in various cities, including Guwahati, Vijayawada, and Lucknow. Awfis’s journey started in 2015, and today, the company is present in 16 cities and 48 micro comarkets in India.
While start-ups and freelancers contribute 11 per cent to the Awfis crowd, the majority is still penetrated by the IT sector. During the conference, the company said that it offers a variety of related services to improve its clients' workspace experiences. The services offered are parking lots, conference spaces, IT support, food and beverage options, and storage alternatives.
The first co-working space to go public
The co-working space has been booming in India. Co-working center operators leased 31 lakh square feet of office space in nine major cities between January and March, up 7 per cent from the previous year, as corporate demand for flexible workspaces increased, according to CBRE.
Similarly, a report by advisory firm Avendus says that from 61 million square feet in 2023, India’s flexible workspace market is supposed to reach 126 million square feet by 2028. The growth of global capacity centers, the increase in the number of start-ups, and the booming IT sector are the reasons behind the increasing demand for co-working spaces.
Ramani said that India has both demand and supply for co-working spaces. Talking about the co-working space in India, Ramani highlighted that companies are increasingly viewing co-working as a fundamental offering for their customers, emphasizing its staying power in the market. He added that urbanization is a significant trend in India, shaping the country's narrative with a promising outlook.
Awfis faces competition from IndiQube, Qdesq, the 91springboard sector, and others. The company says that its business model is very robust, as they focus on an asset-light managed aggregation model. Under this model, the office space developer or owner contributes to the capital expenditure in return for a share of revenue or profits.
This strategy, according to Ramani, allows the company to achieve a higher return on capital and improves resilience during market downturns, like the COVID-19 pandemic, when office space demand decreases. In contrast to other models where office space providers shoulder the entire capital expenditure, this approach shares the financial burden between parties.
