Tor Investment, Arena Investors and M&G Investments are among the new investors which have participated in this round, sources aware of the matter said.
For Udaan, which has said it
intends to go public in the next 18-24 months, the move to pick up debt financing through convertible notes comes across as being significant. These investors will have the option to flip their convertible notes into equity at a later stage, potentially before the IPO.
“We are excited and glad to share that we have five new marquee investors coming onboard the Udaan juggernaut, as part of our recently concluded convertible note financing. This round was oversubscribed 2x and also saw participation from our existing investors, including those who bought into the company through the secondary (Esop) round in H1 2021,” Pande said in his note.
According to him, the latest financing reflects Udaan’s “broadening the capitalisation strategy” as it embarks on its IPO journey. “With this convertible offering, we, as a company, have started building a completely new muscle in our finance function – which we will continue to strengthen as we go forward,” Pande added. He was previously the CFO at IndiGo, the airline company.
Udaan didn’t immediately reply to ET’s request on its debt financing through the convertible notes instrument. Pande said in his note that companies like Airbnb, Uber and Spotify had raised similar debt financing through convertible notes before their IPOs.
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The Bengaluru-based company had previously raised $50 million in traditional debt financing too.
Udaan has undergone a significant change in its management last year. In September, one of its cofounders
Vaibhav Gupta was appointed as the company CEO. At the time, Udaan said in an official statement that Sujeet Kumar and Amod Malviya, the other two cofounders will support the functioning of a CEO-led organisation and will continue to shape the strategic roadmap and investment decisions as active board members.
According to sources, the Bengaluru-based firm had explored equity fundraise last year and appointed investment banker Goldman Sachs. But the company was unable to mop up equity financing at the time, sources told ET.
In January 2020, it
raised $280 million as an extension of its
previous funding round of $585 million after which it was valued at $3.1 billion.
All told, it has now raised more than $1 billion from investors like DST Global, GGV Capital, Lightspeed Venture Partners, Altimeter Capital and Tencent.
Founded by former Flipkart executives, Kumar, Gupta and Malviya—Udaan has been increasingly looking at selling to customers directly through services like Pickily and Price Company. ET first reported in November that it is
entering the consumer-focussed grocery business through the group-buying or community model with a new platform named Price Company, similar to China’s Pinduoduo.
While Pickily is an online supermarket app catering to tier-I customers, Price Company is a group buying platform for serving customers beyond the big cities. ET had reported that Udaan is aiming to leverage its existing supply chain network in these markets to scale the new business rapidly in 2022. Pickily is present in select parts of Bengaluru and Hyderabad.
