KKR, TIGA Investments to buy office space provider Executive Centre – ET RealEstate

BENGALURU | HONG KONG: A consortium led by private-equity firm KKR and investment firm TIGA Investments will buy office space provider The Executive Centre (TEC), the companies said in a statement on Tuesday.

“As part of the transaction, funds advised by HPEF Capital Partners and CVC Capital Partners will exit their investments in the company (TEC). Members of TEC’s management team will continue to own shares in the company,” they added.

Financial details of the transaction were not disclosed.

TEC’s founder and chief executive Paul Salnikow said on Tuesday the company’s business grew seven-fold during HPEF and CVC’s time as investors.

CVC declined to comment on the transaction. HPEF did not immediately respond to a request for comment.

Founded in 1994, TEC provides premium flexible office space across over 150 centres in 32 cities and 14 markets, including Australia, Greater China, India, Japan, Southeast Asia, Sri Lanka, South Korea and the Middle East, with an annual turnover in excess of $237 million, the statement said.

HPEF owned 70% of the company while CVC owned 20%. TEC’s management had the remaining shares.

The two private equity firms paused a sale process of their shares in TEC in 2019 over fears its Hong Kong exposure could weigh on its valuation because of violent protests then taking place there. (https://www.reuters.com/article/executive-centre-sale-idUSL5N2601PM)

Hong Kong accounted for about 30% of its earnings before interest, tax, depreciation and amortisation (EBITDA), Reuters has reported.

TEC’s Salnikow said in April its EBITDA grew to $46.1 million in 2019 from $32.3 million in 2016, with revenue surging from $140.74 million to $235.75 million in the same period.

He did not provide more recent figures.



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Hong Kong’s TEC leases one lakh sq ft office space in Mumbai, Bengaluru – ET RealEstate

NEW DELHI: Hong Kong-based The Executive Centre (TEC), which provides premium serviced office space, has taken on lease one lakh sq ft of office space in Mumbai and Bengaluru to expand its business in India despite COVID-19 pandemic, a top company official said.

TEC entered India in 2008 with its first property in Mumbai. At present, it has around 30 centres in India spread over 8 lakh sq ft with a capacity of 8,000 desks, across major cities.

In an interview, TEC Managing Director-South Asia Nidhi Marwah said: “We have signed two leasing agreements in Mumbai and Bengaluru on pure rental basis.”

TEC has leased 60,683 sq ft of office space in Bandra Kurla Complex (BKC) and 40,000 sq ft in Whitefield, Bengaluru.

Marwah said the company is targeting to open these two centres by March 2021.

Asked about the office space demand during the COVID-19 pandemic, she said the demand for Grade-A office space remains intact and rentals stable.

Besides IT industry, Marwah said there are enquiries for serviced office space from new industries like pharma, banking, and consultants.

She said corporates do not want to invest in setting up their own offices and are looking for flexible office space.

“We are currently operating at an occupancy level of around 85 per cent and our monthly rental collection is also above 90 per cent,” she said.

In June, Marwah had announced TEC’s plan to open five new centres by March 2021 at Bengaluru, Gurugram, Chennai and Pune with an investment of Rs 100 crore. These five centres will have a total of two lakh sq ft area with a capacity of around 2,300 desks.

“We will soon open our new centre in Bengaluru comprising 35,000 sq ft of office space,” Marwah said.

TEC’s India revenue stood at around USD 35 million during the last financial year.

The Executive Centre is Asia Pacific’s leading premium serviced office provider. It has over 135+ centres in 32 cities and 14 countries with an annual turnover in excess of USD 275 million.

Co-working or flexible workpsace space segment has grown rapidly in India in the last 3-4 years. Industry experts believe that the trend is likely to continue despite the short-term disruption caused by the spread of coronavirus disease.



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The Executive Centre’s south Asia revenue up 18% in H1 2020 – ET RealEstate

BENGALURU: Flexible workspace provider The Executive Centre said its revenue in south Asia rose 18% in the first half of the year to $21 million while occupancy was up to 89% from 87%. Globally revenue was up 5% to $120 million.

Total number of workstations occupied as of June 30 increased by 14% compared to last year and client renewals was up to 62%. The company also opened 6 new centres in the same time. Notable new signings were from financial services & banking, IT and consulting sectors.

β€œIt cannot be denied that the Covid-19 pandemic has been the main external factor impacting the performance of companies. As a result, the world of work is changing dramatically as businesses focus on managing costs to survive and look for workspaces with greater flexibility to support in office and remote working.

We have seen stronger demand coming from MNCs and domestic corporates since April across the Greater Bay Area and South-East Asia which helped to drive sustainable revenue growth and profitability in the first half of the year,” said TEC Founder and CEO, Paul Salnikow.

The company has 135 centres in 32 cities which include 30 centres spread over 8 lakh sqft in Mumbai, Gurgaon, New Delhi, Hyderabad, Bangalore, Chennai and Pune.



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