BENGALURU/MUMBAI: Urban Company’s early investors Steadview Capital, Elevation Capital and Accel are looking to sell some of their stake in the home services platform, which is expected to generate aggregate working capital of $100 million to $150 million for the venture capital firm.
The secondary sale would value Urban Company at less than the $2.6 billion it was estimated to be worth when it first raised money in 2022, according to three people familiar with the matter.
To be sure, in secondary market transactions, shareholders sell their shares to existing or new investors, without injecting new capital into the company. These transactions are usually conducted at a discount to the primary market stock price.
“Some investment firms are selling as their funds are nearing the end of their life cycle and they want to liquidate their holdings and create some liquidity before raising the next fund,” said one of the people cited above.
The person added: “Accel may be considering selling close to half of its shares, while the others are still evaluating how much to sell.”
The transaction is part of a broader recapitalization of Urban Company ahead of its planned entry into the public markets within the next 12 months.
Urban Company said it would not comment on the alleged market rumors. Steadview Capital, Elevation Capital and Accel did not respond to requests for comment. Mint Inquiries were sent via email on Monday.
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Secondary market popular
In 2021, Urban Company detailed plans for an IPO in 2023. The following year, the company appointed four independent board members — Ashish Gupta, Ireena Vittal, Deepinder Goyal and Shyamal Mukherjee — in preparation for the listing. However, the plan was postponed and the company is currently targeting an IPO next year.
In July, India-focused investment firm Dharana Capital bought ₹The company received Rs 4,000 crore, or $50 million, for its Urban Company shares from employees and shareholders. The deal enabled Titan Capital, founded by Kunal Bahl and Rohit Bansal, to sell its investment in the company and earn a return of nearly 200 times its seed check nine years ago. ₹57 lakh.
The Indian startup ecosystem is seeing a growing trend of secondary transactions as some investors nearing the end of their fund life cycle are looking to exit their investments and return capital to limited partners (LPs, investors in venture capital funds).
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Several large transactions that have occurred recently are a mix of primary and secondary transactions.
In June, Singapore state investment firm Temasek and Fidelity Management & Research bought a $200 million stake in eyewear retailer Lenskart in a secondary market deal. The following month, beauty retailer Purplle raised $1.3 billion. ₹The company raised Rs 1,000 crore in a funding round led by sovereign fund Abu Dhabi Investment Authority, which was a mix of primary and secondary shares.
Last year, startup exits surged nearly 1.7 times to $6.6 billion as investors sought to provide liquidity to their limited partners in a high-interest environment, Bain & Co said in its recent India venture capital report. The value of secondary and strategic sales also increased, mainly due to large exits by consumer tech companies such as Flipkart and Lenskart, the firm added.
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Driving Profitability
Gurgaon-based Urban Company last raised funding in June 2021, when it raised $255 million in a Series F round led by Prosus, Dragoneer, and Wellington Management at a valuation of $2.1 billion.
The round, which also attracted participation from other notable investors including Vy Capital, Tiger Global and Steadview, included $188 million in primary capital infusion and about $67 million in secondary sales from select angel and early investors, the company said at the time.
Urban Company also said it will use the funds raised to expand its footprint in India and enter international markets, while enhancing other aspects of the business.
Founded in 2014 by Raghav Chandra, Abhiraj Singh Bhal and Varun Khaitan, Urban Company is a technology marketplace that provides home services such as beauty spa, cleaning, plumbing and appliance repair. Last year, the company also entered the branded home appliances space and launched a range of water purifiers.
The company operates in more than 50 cities in India as well as in the UAE, Saudi Arabia and Singapore.
The city company’s operating income rose to ₹For the fiscal year ending March, ₹637 crore. Its pre-tax losses narrowed by 70% to ₹93 crore. The company said that the consolidated revenue for the first quarter of 2024-25 would be ₹28.1 billion rupees, up 37.3% from the same period last year, and pre-tax profit was ₹12 crores.
“This growth was driven by investments in service quality, partner training and enablement, technology development, and the launch of the Native RO water purification device,” Urban Company said in a recent blog. “We also made significant progress in improving profitability and gaining cost efficiencies through operating leverage.”
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