HomeLane to acquire Design Café, raises Rs 255 crore from Hero Enterprise, WestBridge and others

BENGALURU/MUMBAI: Interior décor solutions provider HomeLane will acquire smaller rival Design Café in a share exchange deal for an undisclosed amount while ensuring $Investors including Hero Enterprise and WestBridge Capital provided Rs 255 crore in fresh funding to fuel its expansion.

The combined entity is valued at approx. $30 billion (approximately US$360 million), expected Ebitda to be profitable and generate revenue $1,000 crore in 2024-25, the companies said in a statement. Currently, the combined revenue of both entities is approx. $9 billion rupees.

Ebitda, or earnings before interest, taxes, depreciation, and amortization, is a key measure of operating efficiency.

While the combined entity will cater to a more niche high-end target market, HomeLane, Design Café and Doowup, HomeLane’s affordable home interiors division, will continue to operate as separate brands to cater to different market segments, the statement said.

The new funds are also expected to be used to fund HomeLane’s expansion into new markets, including second-tier cities where demand is growing.

In January, Mint first reported that WestBridge Capital-backed Design Café was in exploratory talks to sell for a merger with peers including Accel-backed HomeLane and KKR-backed Livspace. Other contenders include Saint-Gobain Holdings’ MyHome and JSW Group.

“Our investment reflects confidence in its (HomeLane) business model and meaningful synergies with Hero Realty. We look forward to seeing the innovation and growth this partnership will bring.” Chairman of Hero Enterprise Sunil Kant Munjal said in a statement.

HomeLane co-founders Tanuj Choudhry and Srikanth Iyer said in a statement that the merged entity will adopt a technology-driven approach and leverage the design expertise of Design Café.

Iyer added that India has a huge market for interior decoration suppliers and growth is coming in the short term as more customers choose established companies.

Large scale enterprise

India’s home interiors industry, estimated to be worth US$20 billion, is largely driven by unorganized local players, with few large-scale players emerging.

Companies like HomeLane and Livspace have achieved scale and crossed over $While several other companies have been struggling to grow their businesses, revenue has touched the Rs 1,000-crore mark.

Those that managed to weather the storm are also benefiting from the boom in real estate activity, as several projects launched during the pandemic have begun to materialize and are expected to generate a steady stream of projects in the coming years.

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Sandeep Singhal, managing partner at Westbridge Capital, which participated in HomeLane’s latest funding round, said: “Both teams have demonstrated strong execution in the past and we are confident they will deliver industry-leading results for all stakeholders.”

HomeLane, founded 10 years ago, also operates Cubico and Wrapzap for corporate interiors. It has about 45,000 customers in 30 cities.

Founded in 2016 by Gita Ramanan and Shezan Bhojani, Design Café has raised nearly $30 million in funding to date from investors including WestBridge Capital, Sixth Sense Ventures, Mirabilis Investment, Alteria Capital and Fireside Ventures.

The company also operates mass home interior solutions under the Qarpentri brand, with operations in 10 cities across the country.

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