Smartworks Coworking Spaces Ltd IPO

About Smartworks Coworking Spaces Limited IPO

Smartworks Coworking Spaces Limited IPO is an IPO of TBA. It consists of an offer for sale of up to 6,759,480 equity shares and a fresh issue aggregating up to ₹550 crores. The shares will be allotted on a date TBA. The credit of shares to the demat account will take place on a date TBA and the initiation of refunds will take place on a date TBA.

Objective of Smartworks Coworking Spaces Limited IPO

• Repayment/prepayment/redemption, in full or in part, of certain borrowings availed by the company.
• Capital expenditure for fit-outs in the new centres and for security deposits of the new centres.
• General corporate purposes.

Industry Outlook

India’s digital infrastructure coupled with supportive government policies and initiatives signify India’s stable growth by fostering innovation, accelerating financial inclusion, and enhancing the overall industry’s efficiency. With this backdrop and the post pandemic times have opened up the demand for flexible work spaces. India is one of the largest flexible workspaces markets in APAC with a total stock of over 60 Mn sq. ft in Tier 1 cities like Mumbai, Pune, Bengaluru, Delhi, Kolkata, Chennai, Noida, Gurgaon, and Hyderabad.

Since the early 2000s, office stock has grown more than 18 times from approximately 46.5 Mn sq. ft. as of pre-CY2003 to approximately 841.2 Mn sq. ft. as of March 31, 2024. Indian real estate has emerged as a favoured investment asset class due to various factors including the growth of the economy, demand-supply fundamentals, investor-friendly policies, and increased transparency.

With changing lifestyles, the need for a flexible work environment, a young workforce and a higher value-added nature of work, companies are looking for superior quality office spaces with state-of-the-art lifestyle amenities. CBRE’s Q1 2024 India Office Occupier Survey reveals that approximately 58% of occupiers are more focused on improving employee experience, followed by nearly 28 -60% of occupiers focus on amenities and services such as access to virtual events, fitness facilities/wellness areas, outdoor amenities, and transport services.

According to the CBRE’s India Office Occupier Survey 2024, the number of companies with over 10% of their office space being flexible is expected to jump from 42% (first quarter of 2024) to 59% by 2026. Even in flexible workspaces, approximately 75% -85% seats y-o-y have been getting transacted in 100+ seats cohort categories (Source: CBREReport).

Company Information

Smartworks Coworking Spaces Limited is an office experience and managed campus platform.

The company focuses on mid-to-large enterprises and have built a growing client base, which includes Indian corporates, MNCs operating in India and startups. They equip their campuses with modern and aesthetically pleasing designs using their extensive design library, integrated proprietary technology solutions and amenities such as cafeterias, sports zones, smart convenience stores, gymnasiums, crèches and medical centres. Some of these amenities take care of the daily needs of the employees of their clients, and some are aspirational in nature, leading to collaborative workspace and team building.

Risks of Smartworks Coworking Spaces Limited IPO

• During fiscal 2024, they derived 80.07% of their rental revenue from centres located in Pune, Bangalore, Hyderabad and Mumbai. Any adverse developments affecting such locations and centres could have an adverse effect on their business, results of operations and financial condition.

• Their landlords may not renew leases of existing centres with them or renegotiate terms of their leases which could adversely affect their business, cash flows, results of operation and financial performance.

• The company and some of their subsidiaries have incurred losses and have experienced negative cash flows in the past. They cannot assure that they will achieve or sustain profitability and not continue to incur losses going forward.

• Changing laws, rules and regulations and legal uncertainties, including adverse application of tax laws, may adversely affect their business, prospects and results of operations.

Anchor Investor Information

The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/Offer Opening Date.

IPO Registrar and Book Running Lead Managers

Book running lead managers:

JM Financial Limited BOB Capital Markets Limited IIFL Securities Limited Kotak Mahindra Capital Company Limited

Registrar for the IPO is Link Intime India Private Limited

Business Model

The company earns its revenue through the following:

Smartworks Coworking Spaces Limited typically focuses on leasing entire/large, bare shell properties in prime locations from landlords and transforms them into fully serviced, aesthetically pleasing and tech-enabled campuses with daily-life and aspirational amenities.

Company Growth Trajectory

Smartworks Coworking Spaces Limited started their operations in 2016 with early support from promoters and their family members, followed by investment in their company by early-stage investors in fiscal 2018. They initially operated as a co-working space provider, catering primarily to startups/mid-sized organisations. In a short span of two years, they expanded to become a national player by the end of fiscal 2018 with 12 centres across nine tier 1 cities.

In fiscal 2019, they saw the opportunity to create a platform for mid-to-large enterprises, by creating an offering which could enable them to transition from conventional to fully managed workspaces. As a result, they pivoted their business model to become an office experience and managed campus platform to address the unique requirements of such enterprises.

Post COVID-19, they witnessed a strong demand for flex workspaces, which they capitalised on and established managed campuses that suit the purposes of such large enterprises. They expanded their operations between fiscal 2022 and fiscal 2024 by adding a total SBA of 4,02,000 square feet under their management, with a CAGR of 41.69%.

As of March 31, 2024, their operational centres across India served 603 clients occupying 130,047 seats.

For Fiscal 2024, they have witnessed a seat retention rate of 88.27%. Further, they earned 30.65% of the rental revenue from multi-city clients out of their rental revenue for fiscal 2024.

Company Market Position

Smartworks Coworking Spaces Limited is the largest managed campus operator, amongst the benchmarked peers, in terms of total stock as of March 31, 2024 (Source: CBRE Report).

Their managed campus platform consists of a total SBA of 0.8 crores square feet across 41 centres in 13 cities such as Bengaluru, Pune, Hyderabad, Gurugram, Mumbai, Noida and Chennai, with 182,228 seats, as of March 31, 2024.

As of March 31, 2024, amongst the benchmarked operators, Smartworks has four out of five largest lease signed centres in India all of which are above 50,000 square feet in size, with the largest centre of approximately 70,000 square feet located in Vaishnavi Tech Parkin Sarjapur, ORR in Bengaluru. (Source: CBRE Report). They have constantly outranked themselves in leasing large campuses in India. Vaishnavi Tech Park in Bengaluru surpassed their other campuses, namely, M-Agile in Pune, with a total SBA of 69,000 square feet and AP-81 in Pune, with a total SBA of 55,000 square feet. As of March 31, 2024, their average centre size is SBA of 20,000 square feet.

How To Check Allotment Status of Smartworks Coworking Spaces Limited IPO?

You can check the allotment status of shares either on the website of the Bombay Stock Exchange (BSE) or on the website of the registrar Link Intime India Private Limited. To check the status on the BSE website:

• Visit the BSE website
  
• Click on “Investor Services” and choose “Application Status Check”
  
• Choose the issue type — Equity or Debt (Equity in this case)
  
• Select the Issue Name from the drop-down. The issue name is the company’s name, which is Smartworks Coworking Spaces Limited
  
• Enter your application number or PAN number
  
• Check the box which says “I’m not a Robot” and click on “Search” to know the allotment status
  

Follow these steps to know the allotment status on the registrar’s website:

• Visit the Link Intime India Private Limited website
  
• Choose “Public Issues” from the “Investor Services” drop-down
  
• Select Smartworks Coworking Spaces Limited from the drop-down
  
• Enter your PAN number or Application number
  
• Click on “Submit” to know the allotment status
  

How to Apply for Smartworks Coworking Spaces Ltd IPO?

To apply for Smartworks Coworking Spaces Ltd IPO:

• Step 1: Log in to your Kotak Securities Demat account: Log in to your Demat account to access IPO investments. Next, select the current IPO section.
• Step 2: Specify IPO details: Enter the number of lots and the price you wish to apply for.
• Step 3: Enter UPI ID After entering your UPI ID, click submit. This will place your bid with the exchange.
• Step 4: Mandate Notification: Your UPI app will receive a mandate notification to block funds.
• Step 5: Approve Request Your funds will be blocked once you approve the mandate request on your UPI.