Companies Accel, Elevation, and Tiger will partially exit their investments in the Urban Company IPO.
Get ready for a major cash bonanza as five early investors of professional services platform Urban Company gear up to pocket a combined whopping Rs 1,471 crore from the upcoming initial public offering (IPO) through an offer-for-sale (OFS). That's according to the company's latest Draft Red Herring Prospectus (DRHP) filed earlier this week.
The IPO, which includes a fresh issue of Rs 429 crore, will predominantly feature an OFS component, totalling a staggering Rs 1,900 crore. The significant contributors to this grand sum include Accel, Elevation Capital, Bessemer India, Tiger Global, and VYC11, who are anticipating the following returns:
- Accel: Up to Rs 433 crore
- Elevation Capital: Up to Rs 346 crore
- Tiger Global: Rs 303 crore
- VYC11: Rs 216 crore
- Bessemer India: Rs 173 crore
Accel, the largest seller, is poised to rake in some serious dough, with an impressive first-in, last-out strategy. Comparatively, Elevation Capital, Bessemer, VYC11, and Tiger Global entered the game at progressively higher costs: Rs 5.39, Rs 7.14, Rs 20.40, and Rs 60.25 per share, respectively. This striking difference means Accel's exit value per share is approximately 16.7 times that of Tiger Global, with the remaining investors also seeing substantial returns based on their earlier investments.
Remarkably, none of Urban Company's three co-founders — Abhiraj Singh Bhal, Raghav Chandra, and Varun Khaitan — will be cashing out in this IPO. Each of them currently holds a substantial 6.67% stake in the company.
Before the IPO filing, both the founders and several investors had already started partially offloading their holdings. From September to February, the three founders collectively sold securities worth nearly Rs 780 crore, while Accel, Tiger Global, and Bessemer sold a combined Rs 615 crore in tranches over the same period.
Urban Company is betting big on the largely untapped home services industry, which is projected to reach $97.4 billion by 2029. With less than 1% online penetration as of December 2024, there's a massive opportunity for digital expansion. The company boasts that its service providers earn 15-20% more than typical gig workers in sectors like food delivery or quick commerce, while putting in fewer hours. As of December 2024, Urban Company boasted over 48,169 average monthly active service professionals operating in India.
The company turned a profit in the nine months ended December 2024, posting a restated profit before tax of Rs 27.1 crore, a significant improvement over the Rs 57.8 crore loss the previous year. A deferred tax credit of Rs 215 crore during the same period helped boost profit after tax to Rs 243 crore. Revenue grew by 41% to Rs 846 crore, while costs increased by 23%, resulting in an adjusted Ebitda of Rs 9.3 crore. Final results for FY25 have yet to be disclosed.
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- The investment firm Accel, an early investor in Urban Company, is anticipated to receive up to Rs 433 crore from the upcoming IPO.
- Elevation Capital, another early Urban Company investor, may pocket up to Rs 346 crore from the IPO's offer-for-sale component.
- Tiger Global, with a previous investment cost of Rs 60.25 per share, stands to gain Rs 303 crore from the upcoming IPO.
- VYC11, an early investor, could receive Rs 216 crore from the IPO, while Bessemer India might obtain Rs 173 crore.
- Despite the significant returns from the IPO, the founders of Urban Company, including Varun Khaitan, will not be cashing out, with each holding a 6.67% stake in the company.
