Urban Company Founders, Early Investors Offload Shares Ahead of IPO

The founders of consumer service unicorn Urban Company, which is all set to go public this year, have cumulatively offloaded shares worth Rs 779.08 crore in secondary deals. Of this, Abhiraj Bhal, Varun Khaitan, and Raghav Chandra have sold shares worth Rs 259 crore each, according to a report published by Inc42.

The founders offloaded a portion of their shares to some of the company’s existing investors. The buyers include Prosus Ventures, Dharana Capital, Think Investments, former ITC executive Sanjiv Rangrass, SailThru Ventures, and Swiggy cofounder Sriharsha Majety.

After these deals, each founder now retains a 6.67% stake, amounting to a combined 20.1% equity in the company. The founders have also opted out of participating in the upcoming IPO’s offer-for-sale (OFS) component.

Besides the founders, UC’s early backers like Accel India (Fund IV), Bessemer India Capital, and Tiger Global Management (Internet Fund V), have also offloaded shares in the run-up to the public listing.

Urban Company IPO

Urban Company on Tuesday filed draft red herring prospectus with market regulator the Securities and Exchange Board of India for Rs 1,900-crore initial public offering, of which only Rs 429 crore is the fresh issue component.

The unicorn intends to use Rs 190 crore of the net proceeds for developing technology and cloud infrastructure, Rs 70 crore for paying the lease of its offices, and another Rs 80 crore for marketing-related activities. It might also undertake a pre-IPO placement before filing RHP for an aggregate amount of Rs 85.8 crore.

Urban Company operates a technology-driven, online services marketplace for services and solutions across various home and beauty categories. As of December, the company operated in 48 cities in India and also in UAE, Singapore, and Saudi Arabia.

Urban Company's Financials

The company garnered profit during the nine-month ended December against a loss it incurred during the same period a year ago. While one can argue that the earnings of the company was mainly boosted by a one-time tax credit of Rs 215.46 crore, the company managed to book profit before tax as well, though it was just Rs 27.14 crore.

Urban Company had incurred losses in all the preceding three years FY24, FY23 and FY22. However, it has shown steady improvement on the revenue front, as it rose 30% between FY23 and FY24 and 45% between FY23 and FY22. Further, it had recorded net cash inflow of Rs 63.5 crore as of December 2024-end up from Rs 34.1 crore a year ago.

Share of revenue from international business has been increasing on a steady rate and it accounted for nearly 14% of the company’s total revenue in Apr-Dec 2024, as per the company’s draft papers.