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Summary is AI Generated. Newsroom Reviewed
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Weak financials include consistent losses and negative net worth of Rs 437.4 crore as of March 2024
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Rs 3,000 crore IPO proceeds will go entirely to selling shareholders and promoters, not business growth
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Promoters face ongoing criminal investigations for conspiracy, cheating, breach of trust, and money laundering
Weak financials, serious legal proceedings against promoters and heavy dependence on brand value of WeWork Global should keep the market cautious about WeWork India Management Ltd., according to InGovern Research Services Pvt.
The firm also noted that the entire proceeds from Rs 3,000 crore-IPO will go to the selling shareholders and promoters. That means no new funds will be deployed for business growth or deleveraging.
InGovern said investors may consider both the opportunities and risks in the company — strong brand, scalable business model, and expanding demand balanced against governance proceedings, control weaknesses, and dependency on the WeWork brand license.
The IPO, launched on Monday, Oct. 6, is yet to be fully subscribed as of Tuesday noon.
Financial Challenges
In its note, InGovern Research said the company has faced consistent losses, negative cash flows, and high lease-related costs consuming over 43% of revenues. The company had a negative net worth of Rs 437.4 crore as of March 31, 2024. The net worth data was, however, not reported by the proxy firm.
The net profit reported in the financial year 2025 was solely due to a deferred tax credit of Rs 286 crore, with no underlying operational turnaround.
Occupancy levels are below peers, suggesting weaker asset utilisation and slower demand recovery relative to competitors, the mote said.
Legal Issues
InGovern Research highlighted ongoing criminal proceedings against promoters Jitendra Virwani and Karan Virwani, including investigations by the central agencies for alleged offences such as criminal conspiracy, cheating, breach of trust, and money laundering.
It also noted a writ petition in the Bombay High Court by investor Vinay Bansal alleging that the company’s draft red herring prospectus contains misleading statements and significant omissions, including the concealment of a criminal chargesheet filed against its promoters for alleged serious economic offences.
Brand Risk, Control Risk
WeWork India operates under a 99-year license with WeWork Global, making it heavily dependent on continued promoter control and brand compliance, posing substantial operational risks, InGovern Research said.
Any interruptions in the availability of WeWork Global platforms, or changes to intellectual property ownership or licensing terms following the recent reorganisation of the US-based firm, could temporarily affect operational continuity, the note said.
As per the latest IPO offer documents, over 53% of WeWork India's pre-IPO shares held by promoter Embassy Group were pledged as security against Rs 2,065 crore of debt.
While currently released, these shares must be re-pledged if the IPO listing delays, threatening promoter control and investor interests. "Continuous shareholder vigilance on pledge status and event triggers post-IPO is advisable," InGovern Research said.
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