Udaan secures $160 million in funding, simplifies capital structure

Existing investors M&G Prudential and Lightspeed joined new backer BlackRock in the financing, combining equity, debt and bond conversion as Udaan moves closer to a potential IPO

Ecommerce firm Udaan said it has proposed a financing transaction of about $160 million, combining new equity, fresh debt and the conversion of a portion of its outstanding convertible bonds into equity. Existing shareholders and a new investor will provide fresh equity capital, while certain bondholders will swap part of their holdings for shares. The remaining convertible debt will be extended under revised terms.

 

Separately, one of the world's largest investment management firms has committed about $45 million in fresh financing through its private credit platform, bolstering Udaan's balance sheet and supporting its long-term growth plans.

 

Udaan didn't disclose the identities of the investors. Existing backers, including investment company M&G Investments and venture capital firm Lightspeed Venture Partners, participated in the financing alongside new investor, global asset manager BlackRock, according to people familiar with the matter.

 

 

The transaction would strengthen Udaan's balance sheet, simplify its capital structure and provide additional financial flexibility as the company pursues its next phase of growth and advances plans for a potential initial public offering (IPO).

 

“This financing round marks another milestone in Udaan’s journey towards building a sustainable, profitable and institutionally resilient business,” said Vaibhav Gupta, cofounder and chief executive officer of Udaan. “Over the last several quarters, we have consistently improved our operating performance by delivering healthy growth while significantly strengthening profitability and cash efficiency. With a stronger balance sheet and a simpler capital structure, we are well positioned to continue investing in customer value, deepening our market leadership and progressing towards our long-term public market ambitions."

 

Over the 10-quarter period from the fourth quarter of calendar year 2023 (Q4CY23) to Q1 CY26, the company delivered approximately 25 per cent compound annual growth rate (CAGR) in revenue, improved contribution margins by nearly 500 basis points (bps), and reduced ebitda burn by around 70 per cent. With its largest operating cities and clusters now ebitda profitable, Udaan said it continues to demonstrate sustained progress towards profitable growth and the scalability of its cluster-led operating model.

 

Ebitda denotes earnings before interest, taxes, depreciation and amortisation.

 

The company said it continues to expand its portfolio of higher-margin businesses, with the private label portfolio now contributing 15-25 per cent of sales of staples such as rice, wheat pulses, etc., across operating cities. This has helped the company to strengthen the quality of earnings while improving operating leverage and unit economics.

 

The proposed transaction remains subject to customary closing conditions, documentation and regulatory approvals, where applicable.

 

“This transaction is an important milestone in Udaan's journey. It creates a cleaner, more deleveraged balance sheet, simplifies the capital structure and brings together a strong, long-term investor base,” said Rajat Ranjan, managing director, Kotak Mahindra Capital Company (KMCC). “Public markets reward businesses that compound sustainably, and this transaction provides a strong foundation as the company progresses towards its public market ambitions.”