Prosus, a Netherlands-based investor, has valued Urban Company at about US$2.4 billion, according to its latest annual report.

The firm holds a 6.8% stake in Urban Company, estimating its fair value at US$161 million as of March 31, 2025.

Urban Company is moving toward an IPO after filing a draft red herring prospectus with SEBI in April 2025 to raise 1,900 crore rupees (US$220.500).

The IPO will include a fresh issue size of 429 crore rupees (US$49.7 million) and an offer-for-sale component worth 1,471 crore rupees (US$170.708).

Key investors, including Accel India, Elevation Capital, Bessemer India, Tiger Global, and VY Capital, are expected to sell shares during the IPO.

In September 2024, Prosus reportedly invested US$30 million in Urban Company through an all-secondary transaction.

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🔗 Source: YourStory

🧠 Food for thought

1️⃣ Strategic timing in a selective IPO market

Urban Company’s IPO comes at a time when investors are increasingly favoring profitable companies in public offerings.

The company’s first full year of profitability (₹239.8 crore net profit in FY25) directly aligns with global IPO trends showing investors becoming more selective, focusing primarily on companies with proven financial performance 1.

This timing appears strategic as the global IPO market saw 20% year-over-year growth by value in Q1 2025, with profitable companies increasingly dominating new listings in growth markets like India 1.

Urban Company’s transition from a ₹92.7 crore loss in FY24 to profitability in FY25 likely strengthens its IPO positioning during a period when market uncertainty has made investors more discriminating about new offerings.

The company’s focus on cost controls mentioned in its financial turnaround narrative aligns with the broader market preference for operational efficiency over pure growth metrics.

2️⃣ Valuation recalibration reflects pre-IPO market realities

The valuation adjustment from $2.8 billion (previous reports) to $2.4 billion (Prosus fair value assessment) represents a common pre-IPO recalibration pattern.

Despite this valuation adjustment, Prosus is actually increasing its commitment through a $30 million additional investment at a reported $2.6 billion valuation, indicating confidence in the company’s fundamentals 2.

This reflects a broader trend where late-stage investors reconcile private market valuations with potential public market expectations, as seen in other recent tech IPOs where valuations were adjusted before public offerings.

Urban Company’s balanced approach to its offering, combining a fresh issue (₹429 crore) with an offer-for-sale component (₹1,471 crore), demonstrates a strategy that serves both company growth needs and early investor liquidity demands 3.

The company’s valuation reflects a maturing business model in the home services sector, with operations in 35 cities and a network of over 35,000 service partners 4.

3️⃣ Divergent investor strategies signal market positioning

Urban Company’s IPO reveals contrasting approaches among its investor base, with early backers seeking liquidity while others increase their positions.

Major investors like Accel India, Elevation Capital, Tiger Global, and VY Capital are planning to partially exit through the ₹1,471 crore offer-for-sale component, capitalizing on the IPO opportunity after years of private investment 3.

Simultaneously, Prosus is doubling down on its investment with an additional $30 million, suggesting confidence in the company’s post-IPO growth potential 2.

This split strategy is particularly noteworthy given that Accel and Elevation Capital paused plans to sell further stakes until the IPO, indicating strategic timing of their partial exits 2.

The divergent investor approaches reflect the broader trend in Indian tech investments where early backers seek returns while growth-stage investors continue to build positions in companies demonstrating profitability and market leadership.

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