Urban Company sets IPO price band, early investors eye windfall

Urban Company, India’s largest home-services marketplace, has set the price band for its upcoming initial public offering at Rs 98 to Rs 103 a share, valuing the offer at up to Rs 1,900 crore ($228 million). The IPO opens for subscription on September 10 and will close on September 12, with the anchor book slated to open a day earlier.

The offering is a mix of a fresh issue worth Rs 472 crore and an offer for sale of Rs 1,428 crore. Proceeds from the fresh issue will be used for technology investments, office leases, marketing and other corporate purposes.

Investors can bid in lots of 145 shares, requiring a minimum outlay of Rs 14,935 for retail participants. Of the overall issue, 75% is earmarked for institutional buyers, 15% for high-net-worth investors (HNIs), and 10% for retail investors. A separate Rs 2.5 crore pool is reserved for eligible employees.

The IPO comes at a time when the company’s backers are looking for multi fold gains. Founders Abhiraj Singh Bhal, Raghav Chandra and Varun Khaitan—who each hold about 9.77 crore shares acquired at negligible cost—now see their stakes valued at more than Rs 1,000 crore each.

Accel India IV’s 14.52 crore shares, purchased at an average Rs 3.77, are now worth nearly Rs 1,500 crore, a 26-fold jump. Elevation Capital’s 15.9 crore shares, bought at Rs 5.39, have risen nearly 18 times to Rs 1,638 crore. Bessemer India’s 9.47 crore shares, acquired at Rs 7.14, are valued at Rs 976 crore, about 13 times higher.

VY Capital, which joined the captable at a later stage, purchasing the stake at an average cost of Rs 20.4 a share, is set to post hefty gains. Its 9.18% holding is now worth about Rs 1,377 crore, a five-fold return. VY's total stake in the company stands at 11.8% through its three different funds.

Steadview Capital and Prosus, each owning 6.8%, will see their stakes valued at roughly Rs 1,020 crore apiece.  

Tiger Global tells a different story. The New York investor’s 4.73% stake, valued at about Rs 710 crore, delivers only a 70% return, given its average cost of Rs 60.25 per share, a modest outcome compared with the windfalls of Urban Company’s earliest backers.

In the unofficial grey market, Urban Company’s shares were trading at a Rs 10 premium to the upper end of the price band, according to market tracker investorgain.com.

Founded in 2014, Urban Company connects consumers with service professionals ranging from beauticians and cleaners to electricians and plumbers. The IPO marks a milestone in the company’s bid to expand its reach beyond India and deepen its technology-led offerings.