Udaan Lines Up $160 Mn Financing Round To Strengthen Balance Sheet
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B2B ecommerce unicorn Udaan has announced a financing worth about $160 Mn as it looks to strengthen its balance sheet and simplify its capital structure while dealing with debt obligations.
The proposed transaction comprises fresh equity, new debt and debt-to-equity conversion.
The startup said that existing investors, along with a new investor, are expected to participate in the funding round. Meanwhile, some existing bondholders will convert a portion of their debt into equity. The remaining bonds will be extended on revised terms.
It claimed that “one of the world’s leading investment management firms” has committed about $45 Mn through its private credit platform as part of the transaction. The details of investors and the timeline for the completion of the transaction are yet to be discerned.
The financing comes at a critical time for Udaan.
Earlier this month, the startup’s creditors initiated insolvency proceedings against the startup’s Singapore-based parent entity after it defaulted on about $170 Mn worth of compulsorily convertible notes that matured on June 30.
Creditors had rejected the company’s debt restructuring proposal, prompting the legal action. At the time, Udaan had said the proceedings related only to its offshore holding company and would not affect its India operations.
The latest financing might also be aimed at resolving that overhang by restructuring the company’s outstanding debt ahead of the National Company Law Tribunal (NCLT)-linked process as well as improving its financial position.
Udaan said the transaction will materially strengthen its balance sheet, simplify its capital structure and improve its readiness for a future public listing.
The ecommerce unicorn has been working to cut its loss and strengthen its balance sheet amid a prolonged funding slowdown in the B2B ecommerce sector.
It’s focusing on improving profitability by cutting costs, reducing discounts and sharpening its focus on high-frequency categories such as FMCG. The startup has also expanded its logistics, fintech and retail tech businesses to diversify revenue streams and improve margins after the funding slowdown hit the B2B ecommerce sector.
The strategy appears to be yielding results. Udaan said its revenue has grown at a CAGR of about 25% over the last 10 quarters, while contribution margins improved by nearly 500 basis points and EBITDA burn fell around 70%. The company added that several of its largest operating clusters are now EBITDA profitable.
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