House of innovative co-spaces
The landscape of modern workspaces is witnessing a seismic shift towards flexibility, innovation, and collaboration, with co-working spaces at its heart. As businesses of all sizes gravitate towards more dynamic and adaptable working environments,the sector is also experiencing unprecedented growth. The surge is driven by the demand for cost-effective, scalable office solutions that foster community, creativity, and connectivity, convenience, ease and rapid scalability for professionals and businesses alike.
Amidst this bustling ecosystem, EFC (India), short for Employment Facilitation Centre, has emerged as a standout fast-growing innovative workspaces firm. Nestled in Pune and being one of the only entities of its kind listed on the stock exchanges in integrated serviced office and co-working spaces, EFC (India) has created a unique and diverse offering. Its businesses span managed office spaces, enterprise offices, asset renting, turnkey projects, and bespoke co-working spaces under its distinguished brands, EFC and Sprint.
Over the years, EFC (India) has demonstrated its robust growth model. In a span of a few years, its operations have extended into seven cities while the firm has expanded to over 1.5 million sq ft of co-working space with more than 32,000 seats as on 31 December, 2023. Its client list also boasts of prestigious firms like Tech Mahindra, Amazon, and the Tata Group.
“Our aim is to create environments that are catalysts for innovation, collaboration, and growth. We have integrated large anchor clients into our model which secures a stable revenue stream, and ensures sustainability and allowing us to invest in future growth. This balanced approach, where a significant portion of our revenue comes from these anchors while still nurturing the vibrant community of co-working spaces, is the future,” says Umeash Sahhaii, founder and CEO, EFC (India) Ltd who aims to expand its offerings. “The fact is that we want to create spaces that inspire and facilitate success for everyone from start-up founders to multinational corporations.”
Era of co-workspace
Corporates around the world are optimising realty costs – evolving from the idea of owning swanky offices to operating from all-inclusive managed facilities. India has emerged as one of the most preferred flexible workspace markets in the world – outstripping its APAC region peers. Since 2019, flexible office (flex) space stock across the top 6 cities has almost doubled to 43.5 mn sq ft – accounting for an impressive 6.3 per cent of the total Grade A office stock. According to Colliers, India’s flex space market has witnessed relatively higher growth, with its flex space penetration hovering around 6-7 per cent compared to 3-4 per cent in other markets of the APAC region. This outranks other key markets within APAC where penetration accounts for 3-4 per cent on an average.
The Indian workforce has a growing penchant for flex space environment – offering a host of amenities and less maintenance and ownership. Incidentally, by the end of 2023, flex space leasing is estimated to have occupied 15-20 per cent of overall office leasing – thereby opening a whole new direction for a dynamic market to thrive ahead.
“We like real estate as a service (RAAS) within the real estate business and EFC has a unique business model making it India’s only fully integrated RAAS platform. While the global narrative has been largely focused on exploring co-working workspace valuation opportunities, EFC’s managed workspaces present a novel avenue,” says Vineet Arora, Founder, NAV capital, a Dubai-based fund.
“This segment, being managed work-spaces, is traditionally different from the co-working spaces segment, owing to higher client stickiness. Umeash and team have built a deep and wide structure to absorb and elevate corporate relationships, which has enabled them to carve a niche for themselves in this segment,” adds Arora speaking about EFC (India)’s strategic focus on nurturing relationships with large anchor clients, from which it derives 80 per cent of its revenues, prioritising both stability and growth. The model ensures steady revenue and safeguards margins against market volatility. EFc further balances demand with exclusivity for other businesses and startups, enhancing the value proposition for all stakeholders. It creates a diversified ecosystem where large enterprises and dynamic start-ups coexist, each benefiting from tailored solutions that meet their specific needs. as a result, EFc (India) contributes to a vibrant, collaborative business community, and is growing as a leader in the office space solution sector, with a keen eye on sustainable, long-term growth.
Nikhil Bhuta, Whole Time Director at EFc (India) adds: “We have also expanded its horizons beyond the conventional boundaries of office spaces into the realm of interior design and fit-out solutions, through its wholly-owned subsidiary, Whitehills Interior Ltd. This contributes to the mitigation of margin growth, illustrating EFCs holistic approach to business growth and sustainability.”
“With most large clients opting to design their workspaces on leased premises, we again saw a novel opportunity for an additional revenue stream, given our expertise to optimally utilise space. Our venture into designing and fit-out solutions was born out of the recognition of an underserved niche. With our deep industry knowledge and creative expertise, we’ve identified unique opportunities to serve our clients better, enhancing their workspace experience while also expanding our business,” notes Sahhaii.
New growth chapter
In 2007 Sahhaii, hailing from agra, recognised the potential of the market, with Pune as a starting point. The Pune-headquartered EFc (India) began as a small project of helping a local builder utilise unsold inventory in one of his properties. “capital was a stretch but ambition was aplenty,” states Sahhaii, describing the initial years. “The initial effort yielded highly promising results as we targeted a large company that was looking to reduce its facility costs,” he adds. What followed was a series of collaborations – identifying stressed or unsold inventories across key locations in Pune and getting a perfect match in terms of the client’s interests and requirements.
Facing the challenge of limited capital, especially for a burgeoning enterprise, Sahhaii steered EFc towards becoming a company that prioritises both cost-efficiency and quality. “We adopted a culture centred on stringent cost control and rapid execution, which translated into highly efficient projects,” he explains. This strategic approach not only facilitated tighter control over the outsourcing of fixtures and furniture but also set the stage for greater integration within the company’s operations.
Sturdy performance
EFC (India) continues to scale up its offering on the robust demand for office spaces and expansion, and the strategy has been paying off. Total income rose sharply to R329.66 crore during the ninemonth-period ended December 2023 as against R41.43 crore in the corresponding period of the previous year (FY202223). The company has continued to build upon its anchor-driven integrated business model to drive further scalability. In the first nine months of FY24, its net profit jumped to R35.37 crore from R3.80 crore in the same period a year ago.
In his recent note on the company, Avinash Goraskhar, research head, Profitmart, mentioned that the key factors driving the planning and construction of each co-working facility include affordability, ease of collaboration, strategic location, and single-point billing to cover all expenses. EFc (India) offers enterprise-office services to large corporates requiring 100-plus seats at a single location. “This unique approach not only satisfies the immediate needs of businesses but also aligns with long-term strategic goals, making EFc a preferred partner for corporate workspace solutions,” says Goraskhar.
Further, the concept of shared workspaces has gained significant momentum in the last 6 years, and currently, India is the second-largest co-working market in the world. It is estimated that around 30-35 million sq ft of flexible office stock is available across the country. approximately 71 per cent, or 25 million sq ft, is from large operators.
In the pre-covid era, there were around 400 co-working facility operators across 1,500 locations in about 55 cities in India. This has increased to around 965 operators spanning 2,320 locations in about 90 cities, indicating a noticeable increase in the utilisation of commercial real estate spaces. In fact, top flexible workspace providers are expected to post 30–60 per cent growth in revenue this financial year.
In its recent report ‘Flexing the Workspace-Back to Office’, real estate consultant Vestian highlighted that over 7.6 lakh seats are available with flexible space operators spread across more than 1,000 centres in India. There are 50 major flexible space operators. The top 10 players hold 84 per cent of the total flexible office space portfolio, the consulta
Efficient and strategic expansion
Given its humble roots, EFc’s efficient use of capital accelerated its growth journey. The firm found innovative ways to scale up growth and expand its horizons, while the decision to enter the capital markets was a game-changer for the company. The move, in august 2022, when EFc (India) adeptly executed a reverse merger to list on the Bombay Stock Exchange (BSE), expanded the potential for growth. “access to the capital markets has significantly bolstered our recognition among banks, leading to a more favourable capital cost structure, which would mean more recognition and lower cost of capital from banks too,” adds Sahhaii.
With the doors wide open both in capital and opportunity, Sahhaii is setting his ambitions even higher. “Leveraging this newfound financial flexibility, we are poised for a massive expansion over the next 3 years. Our aim is not just to increase our footprint but to solidify our standing as one of the industry’s foremost companies.” This expansion will be funded through a mix of capital, both equity and debt. “We plan to add around 60,000 seats over the next 3 years on the back of strong institutional demand, taking the total capacity from 32,000 seats to 92,000 seats by march 2026 and aim to become one of the biggest integrated players in the industry,” notes Sahhaii.
Given its capabilities and the opportunity landscape, investors are pouring in. recently, the company raised about Rs. 242.44 crore through fresh issuance of equity shares for its next phase of growth, particularly for business expansion and general corporate purposes. The company has made a preferential allotment of the fresh issue of 85,97,318 equity shares of a face value of R2 each at an issue price of R282 per share to 115 investors. among some of the notable investors, Sageone Flagship Growth 2 Fund has subscribed to 7,47,340 equity shares, Vanaja Sunder Iyer has subscribed to 8,86,525 shares, and Forbes EMF has subscribed to 7,50,000 shares.
“The landscape is dotted with startups in losses chasing an undeniable opportunity segment,” says Samit Vartak, founding partner and chief investment officer, SageOne Investment managers. “however, EFc being the only listed player, is both profitable as well as capable, given its demonstrated growth through the sheer grit and determination of the founder. hence, we found it to be a highly attractive investment opportunity,” he adds.
EFC is already seeing the success of its business strategy playing out on the bourses. With a market capitalisation of around R1,584 crore, the stock price has surged from a 52-week low of Rs.146.27 to a 52-week high of R495, while it currently trades in the range of Rs. 315-330.
Amidst the ongoing expansion for space requirements and a rising trend towards integration of flexible space requirements, EFC is strategically poised to leverage this momentum, being at the forefront of the shift in consumer preferences for co-spaces. That should further prove its ability to turn co-working opportunities into concrete success.
LANCELOT JOSEPH
lancelot.joseph@businessindiagroup.com