WeWork India Management Limited's initial public offering (IPO), seeking to raise approximately ₹3,000 crore entirely through an Offer for Sale (OFS), has encountered significant criticism from the proxy advisory firm InGovern Research Services. The workspace provider faced hurdles even before its IPO opened for subscriptions on October 3, with a Jaipur-based investor filing a petition against the Securities and Exchange Board of India (SEBI) in the Bombay High Court, alleging inaction on detailed complaints against the company.

InGovern's analysis highlights multiple concerns regarding WeWork India's financial health and disclosure practices, particularly noting that all proceeds from the IPO are directed exclusively to selling shareholders and promoters. According to the Red Herring Prospectus (RHP), no new capital will be infused into the company. The proceeds will primarily benefit Embassy Buildcon LLP and WeWork International entities, with anchor investors allotted shares worth about ₹1,348 crore, covering 45% of the issue. WeWork India, which commenced operations in 2017, provides flexible workspaces across major Indian cities under a long-term license from WeWork Global.

Financial sustainability remains a major concern, as detailed in the InGovern note. Despite rapid expansion and revenue growth, which saw a 22% Compound Annual Growth Rate (CAGR) between FY23 and FY25, the company continues to report negative cash flows. High lease costs consume over 43% of its revenues, and its net profit in FY25 was largely attributed to a deferred tax credit rather than fundamental operational performance. Furthermore, repeated audit flags from FY22 to FY24 concerning control weaknesses remain unaddressed, indicating poor board and audit oversight.

The advisory firm also brought to light serious corporate governance issues. The promoters, Jitendra Virwani and Karan Virwani, are currently embroiled in ongoing legal proceedings, including scrutiny by the CBI, ED, and EOW for alleged offenses such as criminal conspiracy, cheating, breach of trust, and money laundering. These proceedings raise significant questions regarding disclosure adequacy and their “fit-and-proper” status under SEBI regulations. The company also exhibits substantial exposure to related party transactions, and several civil and commercial disputes involving group entities and real estate projects further underscore persistent governance and compliance challenges.

Operational risks are also prominent, stemming from WeWork India's heavy reliance on a 99-year license agreement with WeWork Global. This dependence makes the company susceptible to continued promoter control and brand compliance, posing substantial operational risks. InGovern also revealed that a significant portion of promoter shares had been pledged for borrowing purposes prior to the IPO. Although these shares were released, the advisory firm warned that they would need to be repledged if the IPO listing faces delays, a situation that could potentially jeopardize promoter control and negatively impact investor interests.