HomeLane to acquire DesignCafe in share swap

Interior design company HomeLane on Wednesday said it will acquire Design Cafe in a 100% share swap agreement that values the combined entity at Rs 3,000 crore.

The combined entity also raised Rs 225 crore in funding from existing investors of HomeLane and DesignCafe, as well as an external investment from Hero Enterprise, the companies said in a press note. Westbridge Capital, Mirabilis and Claypond also returned as investors in the fundraise. 

“Our investment reflects confidence in their business model and it also presents meaningful synergies with Hero Realty,” noted Sunil Kant Munjal, Chairman of Hero Enterprise. 

The company plans to use the funds for brand building, technology development and growth initiatives as it looks to clock 20-25% year-on-year growth going forward, HomeLane Co-founder Srikanth Iyer told YourStory.

After the close of the acquisition based on regulatory considerations, the combined entity is expected to clock a revenue of Rs 1,000 crore in FY25, up 33% from Rs 761 crore in FY24, and be EBITDA profitable. The merged entity is not planning on any redundancies during the merger. 

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Post close, HomeLane, Doowup and DesignCafe are expected to operate distinct end-to-end interior brands, each catering to different segments of the market. The company continues to stay bullish on premiumisation trends in the sector. 

"Design Cafe is a design-first brand, design is in our DNA. And that's where we are really strong in and we address a slightly different customer segment. Whereas Homelane has built and scaled their brand based on really good technology and sales process," DesignCafe Co-founder Shezaan Bhojani said.

The combined entity is looking at public listing in the next 9 to 16 months, however, there is no concrete timeline yet, Bhojani added.

HomeLane clocked a revenue of Rs 615 crore with an EBITDA of -11.1% at the end of financial year FY23-24. During the same period, DesignCafe clocked Rs 143 crore in revenue with -15.8% in EBITDA.