BlackRock leads $53 million debt financing round in GoWork

BlackRock, the world’s largest asset management company, has led a $53 million (about Rs 375 crore) debt financing round in Gurugram-based co-working startup GoWork, marking its return to the Indian startup ecosystem after more than five years.

The New York-headquartered firm, which managed assets of $6.84 trillion globally as of June 30, has invested from a private fund managed by its private credit team, with the debt deal its first onshore private financing transaction in Asia’s third-largest economy.

The financing is for a period of 24 months, according to a senior GoWork executive.

CLSA Capital Partners’ Special Situations Group also participated in the deal, which closed in May.

GoWork, which competes with the Oyo-backed Innov8, WeWork and Sequoia-backed Awfis Space Solutions, will use the proceeds towards expansion, marketing and scouting for potential acquisitions, according to Sudeep Singh, its chief executive.

“We should have 25,000 seats under our inventory across the National Capital Region by the end of the current financial year. We are also in the process of identifying potential acquisition targets, and have held discussions on the same,” Singh said, adding that this was the first external capital raised by the two-year-old company since inception.

Founded in 2017 by the real estate and hospitality-focused Nimitaya Group and Singh, who was formerly with investment bank Merrill Lynch, GoWork is currently present in two locations across Gurugram, with a current inventory of 12,000 seats.

“BlackRock is one of most coveted investment management firms in the world, while CLSA Capital Partners is one of Asia’s leading alternative investment platforms – both adding credibility to our brand,” Singh said.

For BlackRock, an investment in the country’s startup ecosystem is rare, and has till date known to have backed only one venture. In 2014, the asset management behemoth had a led a $100 million equity financing round in online marketplace Snapdeal, but since then has stayed away from placing further bets.

“We feel excited about the opportunities GoWork presents as it continues to reinvent and revolutionise the co-working culture in India. GoWork is taking the brick and mortar aspect of the co-working concept further, as well as consistent measures to enable young businesses to reach their highest potential,” Neeraj Seth, head of Asian credit at BlackRock, said in a statement.

The broader Indian co-working sector has seen a spate of transactions, ranging from capital raising to outright acquisitions over the course of the current calendar year.

While SoftBank-backed Oyo acquired Innov8 for an estimated Rs 200-Rs 220 crore, ChrysCap, India’s largest home-grown private equity investor, has also invested in Awfis.

“CLSA Capital Partners’ Special Situations Group is excited about this new investment partnership and remains focused on sourcing additional corporate credit opportunities in India and other parts of Asia,” said Vaibhav Totla, managing director of the Special Situations Group in CLSA Capital Partners.

Flexible workspaces account for about a fifth of office leasing in India. Total gross leasing volume in India touched almost 13 million square feet during the first quarter of 2019, which was 1.45 times higher than the year-ago figure, data from Cushman & Wakefield India showed.