Urban Company starts winding down its Saudi subsidiary, transfers ops to new JV
Tiger Global-backed Urban Company is winding down its step-down subsidiary in Saudi Arabia as it was proving financially unsustainable, according to its draft red herring prospectus (DRHP).
The home-services company said it was transferring its Saudi operations to a joint venture it launched in October 2024, with an intent to wind down the step-down subsidiary, Urban Company Arabia for Information Technology (UCAIT).
UCAIT reported a loss before tax of ₹ 23.45 crore for the nine months ending December 2024, up from ₹ 8.29 crore in the year-ago period. Its loss for the fiscal year 2023-24 stood at ₹ 14.08 crore, for 2022-23 at ₹ 17.77 crore, and for 2021-22 at ₹ 10.10 crore.
'We have started operations through our joint venture entity, i.e., Waed Khadmat Al-Munzal for Marketing, located in the KSA with effect from 1 January 2025 with an intent to eventually wind up the step-down subsidiary, Urban Company Arabia for Information Technology ('UCAIT'),' the DRHP said.
The DRHP suggests that UCAIT was Urban Company's earlier operational arm in Saudi Arabia, as indicated by its standalone financials.
Urban Company's expansion into Saudi Arabia was announced in 2024 through a joint venture with Saudi Manpower Solutions Company (SMASCO). In October 2024, the two companies launched Waed Khadmat Al-Munzal for Marketing Co., a partnership aiming to strengthen and enhance the domestic service landscape in the Kingdom of Saudi Arabia.
While not explicitly stated, the timeline and financial details imply that the joint venture may replace UCAIT in this capacity moving forward.
It currently operates in three international markets: the United Arab Emirates (UAE), Singapore, and the Kingdom of Saudi Arabia. The company previously had operations in Australia but exited that market in 2022 after three years of activity.
Urban Company did not immediately respond to Mint's emailed queries.
It filed its DRHP for a ₹ 1,900 crore initial public offering (IPO) with the Securities and Exchange Board of India (Sebi) on 28 April. The listing comprises a fresh issue worth ₹ 429 crore and an offer for sale (OFS) worth ₹ 1,471 crore.
The OFS will see partial exits from early backers. Accel India is set to be the largest seller, aiming to raise up to ₹ 433 crore, followed by Elevation Capital at ₹ 346 crore, Tiger Global at ₹ 303 crore, VYC11 at ₹ 216 crore, and Bessemer India at ₹ 173 crore.
In the lead-up to the IPO, Urban Company's co-founders—Abhiraj Singh Bhal, Raghav Chandra, and Varun Khaitan—sold shares worth approximately ₹ 780 crore through secondary transactions between September 2024 and March 2025. These transactions were made to existing backers, including Prosus Ventures, Dharana Capital, Think Investments, and others. The founders will not participate in the IPO's OFS component.
In terms of financial performance, Urban Company reported a profit before tax of ₹ 27.1 crore in the first nine months of 2024-25, a turnaround from a loss of ₹ 57.8 crore in the year-ago period.
Its co-founder and chief executive Abhiraj Singh Bhal had acknowledged that international operations such as Saudi Arabia and Singapore would require 'more time' to achieve profitability during a media interaction at the CII Annual Business Summit in 2024.
Bhal had noted that while the UAE market is approaching break-even, Saudi Arabia remains in 'investment mode', given the company's comparatively recent entry and the need for deeper localisation.
He also underscored the complexities of international expansion, cautioning that global ambitions can divert focus from India's vast and rapidly growing domestic market.
First Published: 2 May 2025, 06:00 AM IST
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