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 acquired 96 percent of Urban Ladder’s equity share capital and has an additional option to acquire the balance stake, bringing its shareholding to 100 percent on Saturday night, the company told the stock exchange.
The company’s retail unit proposes to make an additional investment of up to 75 crores, estimated to be completed by December 2023.
The buyout of Urban Ladder is likely to cause consolidation among retailers of online furniture and establish a few big dominant brands, as smaller retailers are squeezed between the power of the behemoths of e-commerce and the unorganized sector that operates outside the tax system.
The eight-year-old company operates a digital marketplace for home furniture and decor items. In many cities across India, it also has a chain of retail stores.
In 2018, the online furniture retailer was priced at around 1,200 crores, which fell in 2019 to around 750 crores.
The audited revenue of UrbanLadder was Rs. 434 crores, Rs.151.22 crores, and Rs. 50.61 crores, and Net Profit/(Loss) in FY 2019, FY 2018, and FY 2017 was Rs. 49.41 crores, Rs. 118.66 crores and Rs. 457.97 crores, according to the stock exchange filing.
“The above investment will further allow the digital and new commerce initiatives of the company and broaden the group’s bouquet of consumer goods while enhancing customer engagement and experience across its retail offerings.” Reliance Retail said For the said investment, no legislative or regulatory approvals were needed. The investment is not part of the related party transaction.
With Urban Ladder set to sell its business, together with market leader Pepperfry, the sector will now be largely dominated by e-commerce markets such as Walmart-owned Flipkart and Amazon. For the e-furniture industry, the last two years have been challenging as funding in this sector has remained subdued and investors have forced them to become profitable.
In recent years, Urban Ladder, in particular, has had a rough ride. The business, founded in 2012 by Ashish Goel and Rajiv Srivatsa, raised more than 700 crores from top venture capital funds such as Sequoia Capital, SAIF Partners, Kalaari Capital, and Steadview Capital hedge fund. But it struggled to raise capital after its Series E round two years ago. It raised ~15 crores last November, although some of its existing investors did not participate in the round.
In August, for about 620 crores, Reliance Retail acquired a majority equity stake in the online pharma company Netmeds.
This investment is consistent with our determination to provide everyone in India with digital access,” said Isha Ambani, director of Reliance Retail Ventures, on the buyout of the Netmeds stake.”