Reliance Retail Ventures Limited (RRVL), a subsidiary of Reliance Industries Ltd (RIL), has acquired equity shares of online furniture startup Urban Ladder Home Decor Solutions Pvt Ltd for ₹182.12 crore
RRVL has bought 96% holding in the equity share capital of Urban Ladder and has a further option of acquiring the balance stake, taking its shareholding to 100%, the company informed the stock exchange on Saturday night.
The retail unit firm proposes to make a further investment of up to ₹75 crore, which is expected to be completed by December, 2023.
Urban Ladder’s buyout is likely to trigger consolidation among online furniture retailers and create a few large dominant brands, as smaller retailers get squeezed between the might of the e-commerce behemoths and the unorganized sector, which operates outside the tax system.
The eight-year old startup operates a digital platform for home furniture and decor products.It also has a chain of retail stores in several cities across India.
The online furniture retailer was valued at around ₹1,200 crore in 2018, which dropped to around ₹750 crore in 2019.
UrbanLadder`s audited turnover was ₹434 crore, ₹151.22 crore and ₹50.61 crore, and Net Profit/(Loss) of ₹49.41 crore, ₹118.66 crore and ₹457.97 crore in FY 2019, FY 2018 and FY 2017 respectively, according to the stock exchange filing.
“The aforesaid investment will further enable the group`s digital and new commerce initiatives and widen the bouquet of consumer products provided by the group, while enhancing user engagement and experience across its retail offerings.” Reliance Retail said. No governmental or regulatory approvals were required for the said investment. The investment does not fall within related party transactions and none of RIL`s promoter/promoter group/group companies have any interest in the transaction.
With Urban Ladder set to sell its business, the sector would now largely be dominated by e-commerce marketplaces like Walmart-owned Flipkart and Amazon along with market leader Pepperfry. The last two years have been challenging for the e-furniture market as funding in this sector remained subdued and investors pressured them to turn profitable.
Urban Ladder, in particular, has had a rough ride in recent years. Founded by Ashish Goel and Rajiv Srivatsa in 2012, the company raised more than ₹700 crore from top venture capital funds such as Sequoia Capital, SAIF Partners, Kalaari Capital and hedge fund Steadview Capital. But after its Series E round two years ago, it struggled to raise capital. Last November, it raised ₹15 crore, though some of its existing investors did not participate in the round.
In August, Reliance Retail acquired a majority equity stake in online pharma firm Netmeds for around ₹620 crore.
“This investment is aligned with our commitment to provide digital access for everyone in India,” said Isha Ambani, director of Reliance Retail Ventures had said on the Netmeds stake buyout.