HOMEGROWN co-working space operator JustCo is merging with China's naked Hub in a move that is expected to result in the largest co-working operator in Asia.
From their estimated combined footprints of 140,000 square metres in gross floor area across 41 locations in nine cities in six countries by end-2017, the merged entity plans to have 194 locations across the region by 2020.
This merger is coming at a time when the co-working industry is growing at an exponential rate of 71 per cent from 2007 to 2015. It is projected to grow 68 per cent annually from 2016 to 2018 globally, according to Statista.
JustCo founder and CEO Kong Wan Sing said: "A merger with naked Hub is timely and makes perfect sense. With JustCo spearheading further expansion in South-east Asia and naked Hub taking care of North Asia, we will become the pre-eminent pan-Asian player in this space."
The merger entails the gathering of 32,000 members across over 8,000 companies in one single platform in Asia by end-2017, Mr Kong added.
Grant Horsfield, founder of the naked Group, said: "This deal will bring together two regional powerhouses in the Asian co-working scene, allowing us to break the US$100 million run-rate revenue before the end of the year."
naked Group's hospitality business of operating lifestyle and luxury resorts and JustGroup's serviced offices business are not part of the merger.
JustCo currently operates co-working spaces in nine locations in Singapore and two in Shanghai. Within the next six to 12 months, JustCo will open in Jakarta, Bangkok, Kuala Lumpur, Ho Chi Minh City, Hanoi and Manila, bringing its total locations to 20 by the end of this year.
naked Hub, which was conceived in November 2015 and now operates 11 naked Hubs in Shanghai, Beijing and Hong Kong, is expected to reach 21 locations by year-end.
Like many co-working space operators, JustCo and naked Hub have been expanding rapidly with the backing of private funds.
JustCo has been able to double the amount of co-working space it operates over the past year with funding from French private equity firm Tikehau Capital Partners and Singapore-based Pinetree Capital Partners.
"The plan for JustCo to merge with another leader in the industry would mean good news for our private investors," Mr Kong said.
"JustCo will stand at a higher valuation and have the ability to access a bigger pool of resources that will help pave the way for our upcoming expansion in Asia."
naked Hub in November closed a US$33 million Series B funding led by Hong Kong's Gaw Capital.
The merged entity is now expected to close another round of funding as soon as August - this is expected to raise over US$200 million from investors including China Renaissance.