About two months after coworking space provider with SEBI, the markets regulator has kept its document in ‘abeyance’.

In its latest update on IPO papers, SEBI said “issuance of observations kept in abeyance” for the coworking startup’s draft papers. However, it didn’t provide any additional details or reasons.

In SEBI’s parlance, “kept in abeyance” means that the regulator’s observations on draft papers are temporarily put on hold, usually pending investigation or regulatory action.

As per WeWork India’s DRHP, its proposed IPO would comprise an offer-for-sale component of about 4.3 Cr equity shares with a face value of INR 10 each. While promoter group Embassy Buildcon LLP will sell 3.34 Cr shares, Ariel Way Tenant (WeWork affiliate entity) will offload 1.02 Cr shares.

Perhaps one of the earliest movers in the now blooming coworking space market of India, the company was formed as a joint venture between the US’ coworking startup WeWork and Indian office development company Embassy Group in 2017.

Starting 2022, the Embassy Group has been acquiring shares of the company from WeWork, which ultimately divested its entire stake in the company. At the time of filing the IPO, Embassy Group held around 73.82% stake in WeWork India, while 1 Ariel Way Tenant (a WeWork Global subsidiary) held the remaining 22.28% stake in the company.

WeWork Inc’s Impact: The JV’s ownership scale tipped towards the Indian company over the years amid mounting controversies surrounding the US-based coworking giant. After filing for a failed IPO in 2019, burgeoning losses and a plethora of governance issues led the company to file for bankruptcy in 2023.

The WeWork Inc debacle had led to its India affiliate facing “negative publicity in the past”.

“While we issued clarificatory statements in the press declaring that WeWork Inc’s bankruptcy filing does not have an impact on our operations and business, if existing or potential members, landlords or investors still perceive us to be a part of the bankruptcy filing or the same entity as WeWork Inc, our business, reputation, operations, results of operations and cash flows could be adversely affected,” WeWork India said in its DRHP.

WeWork Inc sold its entire stake to 1 Ariel Way Tenant Limited in the India business last year.

A Look At WeWork India’s Financial Health: Ahead of the IPO, the company managed to curtail its losses. Its in FY24 from INR 146.81 Cr in the previous year.

Meanwhile, it reported a 26.7% increase in revenue from operations to INR 1,665.14 Cr from INR 1,314.52 Cr in FY23.

The improved performance led credit rating agency ICRA to revise its rating for WeWork India to A- from BBB in January. The agency said that it was expecting the company’s revenue to grow by 20-25% in the near term due to new desk capacities at healthy occupancy levels.

A Look At Competition: While the company holds the leadership position in terms of revenue, it operates in a crowded segment.

For instance, Awfis last year. Its shares are currently trading at INR 638.15, about 50% over its listing price of INR 432.25.

While WeWork India’s IPO bid is currently on hold, its competitor are currently being reviewed by SEBI. Meanwhile, the regulator returned the earlier last month.

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