Urban Company Restructures Saudi Operations Ahead of IPO
Urban Company, the leading home services platform known for connecting customers with professional beauticians, cleaners, electricians, and more, is making bold moves as it gears up for a highly anticipated ₹3,000 crore initial public offering (IPO).
The company recently announced it is winding down its wholly owned subsidiary in Saudi Arabia and transferring its operations to a newly formed joint venture (JV) with Saudi Manpower Solutions Company (SMASCO), a local manpower giant. This shift, revealed in Urban Company’s Draft Red Herring Prospectus (DRHP), comes as the company sharpens its focus on international markets and prepares for its stock market debut, expected by March-end.
A Strategic Shift in the Middle East
Urban Company’s exit from direct operations in Saudi Arabia is not a retreat but a smart realignment. By teaming up with SMASCO, one of Saudi Arabia’s most prominent workforce solutions providers, Urban Company aims to strengthen its foothold in the Middle East while tapping into local expertise and resources.
SMASCO’s deep understanding of Saudi labor regulations, market behavior, and consumer expectations positions the JV for success in a region known for its unique business challenges. This partnership will help Urban Company offer more customized, locally relevant services, expanding its presence without the burden of running a wholly owned foreign subsidiary.
CEO Abhiraj Singh Bhal underscored the company’s cautious international approach: “We’ve been very selective about choosing our markets.” Apart from Saudi Arabia, Urban Company has been focusing on the United Arab Emirates and Singapore — two regions that mirror India’s urban landscape and customer behavior. The Saudi JV will allow Urban Company to navigate the market more effectively without the complexities of full ownership.
IPO Preparations and Big Name Backers
Urban Company has been busy laying the groundwork for its public listing. As part of its IPO preparation, the company has converted into a public limited entity, changing its name from “Urbancalp Technologies India Private Limited” to “Urbanclap Technologies India Limited.”
For the IPO, Urban Company has roped in some of the most prestigious investment banks as lead managers, including Kotak Mahindra Capital, Goldman Sachs, and Morgan Stanley. The company is expected to raise around ₹3,000 crore, making it one of the most closely watched tech IPOs in India in recent times.
The IPO will consist of a fresh issue of shares worth ₹1,500 crore and an offer for sale (OFS) of up to ₹1,500 crore. Major early investors, including Bessemer Venture Partners, are expected to partially exit through the OFS, while Prosus, one of Urban Company’s key backers, plans to inject an additional $30 million through a secondary transaction.
Financial Turnaround and Strong Growth
Urban Company’s financial performance has shown remarkable improvement in recent years — a major confidence booster for potential investors.
For fiscal year 2023–24 (FY24), Urban Company reported a 70% reduction in pre-tax losses, cutting them to ₹93 crore from ₹312 crore in the previous year. Operating revenue jumped nearly 30% year-on-year to ₹827 crore. The first quarter of FY25 has been especially promising, with consolidated revenue surging 37.3% year-on-year to ₹281 crore and the company achieving a profit before tax of ₹12 crore.
This turnaround reflects the success of Urban Company’s efforts to improve operational efficiency, expand its customer base, and strengthen its network of service professionals. The company has also been focused on increasing repeat business and raising order values, which have helped boost margins and revenue.
Big Push Into India’s Tier II Cities
While Urban Company has become a household name in India’s big metro cities, it has its eyes firmly set on India’s fast-growing Tier II cities.
Currently operating in about 40 Tier II cities, the company plans to rapidly expand into 100–300 cities over the coming years. CEO Bhal acknowledged that Urban Company has so far been “largely a metro phenomenon” but believes there’s massive untapped demand in smaller cities where consumers are becoming more digitally savvy and are eager for trusted, professional home services.
“In India, we are just getting started,” Bhal said. “We think the opportunity in Tier II cities is enormous, and our work is cut out for us.” Urban Company plans to invest heavily in local marketing, logistics, and onboarding of service professionals to tap into this promising market.
International Ambitions and Challenges
Besides the Middle East, Urban Company is also focused on international expansion in regions where the Indian diaspora and similar market dynamics offer a natural advantage. The company already operates in the UAE and Singapore, both considered key international growth drivers.
However, international expansion isn’t without challenges. Each market comes with its own regulatory landscape, customer preferences, and competition. The JV model in Saudi Arabia offers a blueprint for how Urban Company might approach other complex international markets — using local partnerships to reduce risk and improve execution.
Investor Confidence and Valuation
Urban Company has attracted a long list of marquee investors over the years, including Prosus, Tiger Global, and Steadview Capital. In June 2021, the company was valued at $2.1 billion after raising $255 million in funding. The upcoming IPO could push that valuation even higher, especially if the public markets respond favorably to Urban Company’s growth story.
Investor confidence is being driven not only by Urban Company’s improving financials but also by its expanding geographic footprint, diversified service portfolio, and strong brand recognition. The company’s ability to retain and attract high-quality service professionals — often seen as the backbone of its business — has also played a key role in its success.
The Road Ahead
As Urban Company moves closer to its IPO, the company faces both opportunities and challenges. On one hand, the shift to a JV in Saudi Arabia and the domestic push into Tier II cities offer exciting growth avenues. On the other hand, Urban Company will need to carefully manage competition, regulatory risks, and customer satisfaction to maintain momentum.
The home services sector is becoming increasingly competitive, with both organized players and informal providers fighting for market share. Urban Company’s investments in technology, training, and customer service will be critical in maintaining its edge.
For investors, Urban Company represents a bet on India’s rising middle class, increasing urbanization, and the growing preference for quality home services. If the company can continue its growth trajectory while managing costs and keeping service standards high, it could emerge as one of India’s standout consumer tech stories.
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