Awfis Space IPO Oversubscribed on Day 2, Retail Investors Leading the Charge! Check Out the Details!

The Awfis Space IPO has seen significant interest, being oversubscribed on the second day thanks to strong participation from retail investors. Here are the key details:

• Subscription Breakdown:
  • Retail Investors: Subscribed 8.76 times.
  • Non-Institutional Investors: Subscribed 4.12 times.
  • Qualified Institutional Buyers (QIBs): Subscribed 31%.
  • Employees: Subscribed 5.18 times.

The IPO has received bids for 2,50,15,068 shares against the 86,29,670 shares on offer, according to BSE data.

Day 1 Highlights

On the first day of bidding, the IPO was subscribed 2.03 times, led by retail investors:

• Retail Individual Investors: Subscribed 6.02 times.
• Non-Institutional Investors: Subscribed 2.76 times.
• QIBs: Subscribed 30%.

The IPO, backed by Peak XV, will close on Monday, May 27.

Anchor Investor Details

32 anchor investors have already contributed ₹268.61 crore at the upper price range of ₹383 per share. Notable international funds involved include Volrado Venture Partners Fund, HSBC Global Investors Fund, Allianz Global Investors Fund, Goldman Sachs Funds, and Natixis International Funds. Ashoka Whiteoak Emerging Markets Trust PLC and Ashoka Whiteoak ICAV also took significant positions.

Allocation

• Retail Investors: 10% of the net offer.
• Non-Institutional Investors: 15% of the net offer.
• QIBs: 75% of the net offer.

Employees bidding in the reserved portion enjoy a discount of ₹36 per share, with a maximum value of ₹2 crore in the employee reservation section.

Company Background

Awfis Space Solutions Ltd provides a wide range of flexible workspace solutions tailored for start-ups, SMEs, large corporations, and multinational companies. Their offerings range from individual desks to customized office spaces.

The company’s promoters include Peak XV, a promoter selling shareholder, and individual promoter Amit Ramani. As of May 14, they held 27,444,403 equity shares, representing 41.05% of the company’s fully diluted equity share capital before the IPO.

Awfis Space Solutions IPO Review

Mehta Equities’ Perspective

Rajan Shinde, a Research Analyst at Mehta Equities, highlights that investors have a unique opportunity to invest in Awfis Space Solutions Ltd., a market leader in the flexible workspace sector in India. Shinde notes that Awfis ranks first among five benchmarked firms and stands to benefit significantly from the growing demand for flexible workspaces.

• Market Potential: The addressable market is expected to reach 282 million sq. ft. and Rs. 474-592 billion by 2026.
• Growth Forecast: Demand in Tier 2 cities is projected to exceed supply by 1.7 times, and the market in Tier 1 cities is expected to grow at a CAGR of 18-19%.
• Innovative Model: Awfis’ Managed Aggregation (MA) model has increased operational seats to 66.43% and reduced capital cost per seat to ₹50,000 by the end of 2023.
• Financial Performance: Operational revenue grew by 44% in FY2022 and 112% in FY2023, with losses decreasing from ₹-57.16 crore to ₹-46.63 crore.
• Future Outlook: Management aims to achieve net cash positive status by the end of the next fiscal year.

Shinde acknowledges the high offer-for-sale (OFS) component but recommends that risk-tolerant investors subscribe, anticipating potential listing gains.

Highbrow Securities’ Perspective

Tarun Singh, Managing Director of Highbrow Securities, expresses concerns about the IPO. Despite revenue growth, Awfis has faced ongoing financial challenges, raising doubts about its market leadership and product diversity.

• Financial Struggles: The company reported net losses of ₹42.64 crore in FY21, ₹57.16 crore in FY22, and ₹46.67 crore in FY23.
• Negative Indicators: The firm has negative earnings per share (EPS) and low return on net worth (RoNW).
• IPO Structure: Singh criticizes the IPO’s structure, where only ₹128 crore is raised through fresh equity, while ₹470.93 crore is allocated for OFS. This suggests insiders might be looking to exit.

Despite acknowledging the sector’s growth potential due to changing work habits, technological advancements, fiscal discipline, and sustainability, Singh advises investors to critically assess the risks.

Awfis Space Solutions IPO Details

• Issue Size: The IPO includes a fresh issue of ₹128 crore and an OFS of up to 12,295,699 equity shares.
  • Selling Shareholders:
    • Peak XV Partners Investments V: Up to 6,615,586 shares.
    • Bisque Ltd: Up to 5,594,912 shares.
    • Link Investment Trust: Up to 85,201 shares.
• Total IPO Value: ₹599 crore.

Use of Proceeds

• New Centres: ₹42.03 crore for capital expenditure.
• Working Capital: ₹54.37 crore.
• General Corporate Purposes: Remaining funds.

Management and Registration

• Book Running Lead Managers: ICICI Securities Limited, Axis Capital Limited, IIFL Securities Ltd, and Emkay Global Financial Services Ltd.
• Registrar: Bigshare Services Pvt Ltd.

Overall, the Awfis Space Solutions IPO offers a promising investment opportunity, especially given the sector’s growth potential. However, investors should carefully weigh the risks, particularly the company’s financial history and the high OFS component.