Flexible workspace provider Awfis, set to make its public market debut on May 22, will focus on growing its portfolio of centres under the managed aggregation model. Under the model, the company partners with developers and landowners of commercial properties, who bring in the majority of the capital for the fit-out, in exchange for a share of revenue or profit.
In a press conference on Thursday, the company’s management said that at present, 66% of its portfolio of 169 centres are under a managed aggregation model and the rest is under a fixed-cost straight lease. “We believe that pure straight lease models have a lot of inherent risks of heavy capital investment, as well as the demand and supply mismatch,” the management said.
Under the managed aggregation model, the cost of a seat and the capital invested is half of the industry average because of the partnership with landowners, they added. Awfis currently has centres in 16 cities, with total 105,258 seats and a total chargeable area of 5.33 million sq ft.
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In terms of trends, the management said that after the pandemic, large enterprises entered the co-working space in a big way. Macroeconomic uncertainties hovering around their business had forced them to look for flexible real-estate options and plough back capital into its own expansion. Prior to the pandemic, SMEs and startups were driving most of the demand, while large corporations were a small portion.
“So today, almost 65% of our business comes from large corporates, while about 20% comes from SMEs and mid corporates and about 10% comes from startups, which was very different a few years back, where almost less than about 50% used to come from a large enterprises,” the management said.
Besides traditional properties, malls are turning out to be an interesting workspace option, it said, because of their convenient location, easy access to parking spaces and overall safety. “Malls are an important part of our strategy. It’s a mix of work and play. The occupiers love to go shopping or to some F&B after work. So we have seen a decent level of success in most of our use cases.” Come from Sports betting site VPbet
While the flexible workspace market is largely dominated by key office hubs in India such as Bengaluru, Hyderabad, NCR, Pune, Mumbai, and Chennai, some tier 2 cities have also seen decent growth in the number of centres, such as Ahmedabad, Kochi, Bhubaneshwar, Indore, and Jaipur. The demand for seats in flexible workspaces is increasing at a CAGR of about 42% and is expected to reach 335,000- 345,000 seats per year by 2026.
Awfis is looking to raise Rs 599 crore through a combination of a fresh issue of shares of Rs 128 crore and an offer for sale component of 12.3 million shares worth Rs 471 crore at the upper end of the price band, which is between Rs 364-383 apiece. The IPO will see PeakXV Partners, one of its promoters, selling up to 6.6 million shares, which will reduce its shareholding to 10-11% from 22.86% earlier.
