The new funding round, when closed, will boost the UK-based company’s shareholding in Udaan from about 15% now, the people cited earlier said. M&G Prudential is the second largest shareholder in the company after Lightspeed Venture Partners, which holds about 40% stake.
Udaan, which saw a 44% cut in valuation at around $1.8 billion last year, may see the latest round at the same flat valuation, the sources said, adding that a term-sheet has been signed and the deal contours are being finalised.
“Term-sheet has been signed and the round could get to around $100 million, depending on if any major new investor joins,” said one of the people cited earlier. “There are some conversations with some family offices as well.”
ETtechA term sheet is a non-binding offer to invest in a company after due diligence.
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Udaan’s chief executive officer, Vaibhav Gupta, declined to comment. An email query sent to M&G Prudential remained unanswered till as of press time on Tuesday.
This will be the first major equity funding round for Udaan since it raised capital in 2021. The December 2023 funding round of $340 million was largely through conversion of debt into equity. Over the last 7-8 quarters, the company has been focusing on rescuing operating costs and implementing its restructured plans under Gupta.
Despite restructuring its debt late last year, Udaan still has about $100 million in debt, and the payment timelines have been pushed further down, said sources.
Udaan has been scaling down operations to cut its burn in a tightening liquidity market. Gupta, who took over as the CEO in 2021, had started the company in 2016 with former Flipkart colleagues Sujeet Kumar and Amod Malviya. For more than two years now, Malviya and Kumar have kept away from the company’s operations but continue to hold board positions.
A person aware of the numbers said Udaan’s net merchandise value run-rate is around $600-700 million, which is sizably lower than earlier. “The company, of course, has seen significant reduction in scale, but has been iterating on Ebitda margins. They are growing around 4-6% on a month-on-month business,” another person aware of changes at Udaan, said.
The company has now sharpened its focus on a few categories and has taken a cluster approach in terms of the markets it is servicing. Bengaluru and Hyderabad are now its biggest markets and it services towns around these big city clusters.
“Grocery, fresh, staples, FMCG and dairy are largely the focus areas while some growth is there in pharma and general merchandise,” one of the people cited earlier said.
“The goal is to turn Ebitda profitable and that’s why this round is being raised to get there and strengthen the balance sheet,” a person aware of the funding talks said.
Udaan’s parent firm is domiciled in Singapore under Trustroot Internet. People aware of the company’s strategy said it intends to move domicile to India as it has plans of going for an initial public offering (IPO). However, any public issue would be at least two years away, they said.
The smaller operating scale was visible in Udaan’s FY23 financials in Singapore. It had reported a 43% fall in gross revenue at Rs 5,629 crore for the financial year ended March 2023, while also cutting losses to Rs 2,075 crore from Rs 3,123 crore in FY22. FY24 earnings are yet to be filed with the Singapore authorities.
ET had reported in January that Udaan is among the Indian startups that have discussed moving their domicile back to India.
