Bengaluru: India-focused investment firm Dharana Capital has purchased shares worth ₹400 crore, or $50 million, in Urban Company from the home-services marketplace’s employees and other shareholders.
The transaction marks the largest liquidity of employee stock options in Urban Company’s history, the company said in a statement.
“Urban Company, with its full-stack approach and focus on partner enablement, has built a strong, capital-efficient and durable business in a challenging local services market,” said Vamsi Duvvuri, founder and managing partner of Dharana Capital, who will join the board of Urban Company as a non-executive director.
Dharana Capital, which typically invests in technology and consumer-focused companies, has also backed insurance platform Zopper, lending platform Lentra, and NoBroker, a real-estate services company that has also ventured into at-home salon services, carpentry, and AC repair, similar to those of Urban Company’s.
While Urban Company did not disclose the deal valuation, secondary transactions generally take place at a discount to the value of the primary shares. In a secondary transaction, shareholders sell their stakes to other existing or new investors, and no new capital is injected into the company.
Sniffing profits
Urban Company was last valued at $2.1 billion when it raised $255 million in June 2021 and entered the unicorn club–startups estimated to be worth at least $1 billion. Since then, the company has not seen any primary fundraises.
The company, a technology marketplace for home services such as beauty and spa, cleaning, plumbing and appliance repair, also ventured into branded home appliances last year with the launch of a range of water purifiers.
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Over the last three months, the company has claimed ₹282-283 crore in revenue with a first-ever profit in April. Beyond India, Urban Company’s UAE business is also set to be on the cusp of profitability, the company said, but did not disclose more details.
A deferred IPO
In 2021, Urban Company had detailed plans for an initial public offering of its shares by 2023. The plans were deferred, and the company is now targeting an IPO next year.
Urban Company also onboarded three independent board members—Dr. Ashish Gupta, Ireena Vittal, and Shyamal Mukherjee—in 2022 as it prepares for a public listing.
Founded in 2014 by Raghav Chandra, Abhiraj Singh Bhal and Varun Khaitan, Urban Company clocked a 45% increase in operating revenue to ₹637 crore in 2022-23. Its losses narrowed to ₹308 crore from ₹514 crore in FY22.
The company has operations in more than 50 Indian cities, and in international markets such as the UAE, Singapore and Saudi Arabia.