Awfis IPO priced at Rs 364–383 per share; employees get Rs 36 discount

Awfis Space Solutions Ltd, a provider of integrated working spaces, has announced the price range for its forthcoming initial public offering (IPO) at Rs 364–383 per share.

This makes Awfis the first co-working space startup to go public.

As part of the offering, eligible employees will receive a discount of Rs 36 per share on reserved shares.

The minimum lot size will comprise 39 shares, with additional bids to be placed in multiples of this amount, according to Awfis.

The offer will consist of a mix of a fresh issue and an offer for sale.

AWFIS plans to use the funds raised to expand its managed aggregation model, improve customer services, and expand into new markets, including Tier I and II cities. The company also plans to invest in operational efficiency and talent development to sustain its growth trajectory.

During a press conference on Thursday, the company cited the requirement for promoters to maintain a minimum of 20% of the post-issue paid-up capital locked in for about 18 months as the rationale behind Awfis' reduced fresh offering.

Amit Ramani, CEO of Awfis, holds an 18.19% stake in the company on a fully diluted basis, while Peak XV Partners Investments has a 22.86% ownership interest.

Bisque, a division of ChyrsCapital, holds a 23.47% shareholding in Awfis; QRG Investments and Holdings 9.58%; and VBAP Holdings 9.35%. Ace investor Ashish Kacholia holds a 5.01% stake in the company.

In the offer for sale segment, nearly 1.23 crore shares will be sold by promoter Peak XV Partners Investments V, along with shareholders Bisque Ltd and Link Investment Trust. The company has so far raised Rs 645 crore in equity capital from these investors.

Awfis operates on an asset-light managed aggregation model, wherein the developer or owner of the office space bears a portion of the capital expenditure in exchange for a share of revenue or profits. This enables the company to achieve a higher return on capital (49.9% for Awfis) and enhances resilience during market downturns, such as the COVID-19 pandemic, when demand for office space is low, said Amit Ramani, the Founder & CEO of Awfis.

This approach is in contrast to other models where office space providers bear the entire capital expenditure, he added.

Almost 66% of the company's portfolio is in managed aggregation.

However, the profit sharing model comes at a the cost of reduced EBITDA margins.

Awfis was operating with an EBITDA margin of 31% in FY23, compared to competitors such as Bengaluru-based Tablespace and Gurugram-based Smartworks, who operated with almost double the EBITDA margins.

Awfis has over 1 lakh seats spread across 5.3 million square feet, catering to almost 2,300 clients. It generated more than Rs 500 crore in revenue from contracts in FY23, most of which came from the IT sector companies.

The company provides a range of allied services to enhance the workspace experience for its clients. The services include food and beverage options, IT services, meeting rooms, parking facilities, and storage solutions. They contribute about 9% of total revenues, according to the company.