SBI Mutual Fund, Permira, others to pick up Rs 450-crore worth of shares in Urban Company in pre-IPO round

Urban Company founder and CEO Abhiraj Singh Bahl

SBI Mutual Fund, Permira, a global tech investor, and others are in advanced talks with early investors of IPO-bound Urban Company to pick up shares worth around Rs 450 crore in the home services firm through secondary transactions, people familiar with the developments told Moneycontrol.

The transactions are expected to close over the coming weeks and will see early backers such as Accel, Bessemer Venture Partners, Tiger Global, Elevation Capital and others sell shares to other large investors and mutual funds ahead of the initial public offering (IPO), slated later this year.

Gurugram-based Urban Company filed its draft red herring prospectus (DRHP) in April. The DRHP says the IPO will be a mix of fresh issue of shares worth Rs 429 crore and an offer of sale of shares worth around Rs 1,471 crore.

These are secondary transactions and the shares will be traded among investors and Urban Company will not receive any proceeds.

Urban Company, SBI MF and Permira did not respond to Moneycontrol’s request for comments.

Urban Company is being valued at around $1.8 billion, or Rs 15,500 crore, during these transactions where Accel, Bessemer Venture Partners, Tiger Global and Elevation Capital are all selling shares. The current valuation is largely unchanged from Urban Company's last valuation of $2 billion in 2021.

IPO ahead

Urban Company, formerly Urban Clap, plans to go public later this year. It plans to use Rs 429 crore in proceeds from  the fresh issue for platform innovation, technology upgrades, marketing and lease payments for office expansions over the next three years.

A sum of Rs 190 crore has been set aside for tech and cloud infrastructure investments, aimed at boosting user and partner experience through AI-led tools and scaling backend systems.

Another Rs 70 crore will go towards new and expanded offices in India and overseas, while Rs 80 crore will be used for brand-building through digital, outdoor, and OTT platforms.

The remaining funds will cover general corporate purposes, including working capital and strategic investments, capped at 25 percent of gross proceeds in line with SEBI norms, the DRHP says.

Expansion is also on the cards. Urban Company, already present in the UAE, Saudi Arabia, and Singapore, plans to widen its international footprint. At present, it operates in 59 cities across four countries.

The plans to expand comes at a time when the company has seen competition intensify from startups such as Pronto and Snabbit in India.

Urban Company’s revenue from operations rose from Rs 437.6 crore in FY22 to Rs 637 crore in FY23 and to Rs 828 crore in FY24. Adjusted EBITDA, which was negative Rs 37.4 crore in FY22 and negative Rs 29.8 crore in FY23, turned positive at Rs 9.3 crore in the nine months ended December 31, 2024.

It reported a net profit of Rs 242.3 crore for the first nine months of 2024, a sharp reversal from the Rs 514.1 crore loss in FY22 and Rs 312.4 in FY23. The profit, however, was largely driven by a deferred tax credit of Rs 215 crore.