Reliance Retail acquires Urban Ladder; may invest Rs 75 crore more

Mukesh Ambani-led Reliance Industries’ retail arm Reliance Retail Ventures has acquired around 96 per cent stake in eight-year-old online furniture marketplace Urban Ladder for Rs 182.12 crore, according to a stock exchange filing. Urban Ladder was among a clutch of startups including Netmeds with which Reliance was in talks for acquiring stakes in the past few months. The acquisition would further amplify Ambani’s e-commerce initiative JioMart that is perceived as a potent competitor to current e-commerce incumbents Jeff Bezos’ Amazon and Walmart’s Flipkart. Selling furniture online would also pit it against Goldman Sachs-backed vertical player Pepperfry. Urban Ladder would “further enable the group’s digital and new commerce initiatives and widen the bouquet of consumer products provided by the group,” the filing read.

Reliance Retail said that it also has an option to acquire the remaining equity capital of Urban Ladder to take its shareholding in the company to 100 per cent. The company also proposed to invest up to Rs 75 crore further in Urban Ladder that may be completed by December 2023.  Prior to the deal, Urban Ladder had raised around Rs 857 crore ($114.9 million) from investors including Sequoia India, Steadview Capital, Elevation Capital, Kalaari Capital, and more, according to Crunchbase. The company also operates a chain of retail stores in NCR, Hyderabad, Mumbai, Pune, Bengaluru, and Chennai, according to its website. Urban Ladder’s audited turnover was Rs 434.00 crore, Rs 151.22 crore, and Rs 50.61 crore for FY19, FY18, and FY17 respectively. The company had posted profits of Rs 49.41 crore in FY19 after Rs 118.66 crore and Rs 457.97 crore loss in FY 2018 and FY 2017 respectively, the filing noted.

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The online furniture market is growing at around 80-85 per cent CAGR from $104 million in 2017 and is likely to be worth $700 million in the current year, as per a RedSeer’s August 2020 analysis. The share of metros and Tier-I cities remains in the majority worth $525 million followed by $140 million coming from Tier-II cities and $35 million from Tier-III and beyond cities and towns. The overall furniture market is growing at around 15-17 per cent from $16 billion in 2018 to an estimated $28 billion in 2023. Financial Express Online had reported last year that as per a RedSeer’s analysis around September 2019, Flipkart had a 41 per cent in the online furniture market up from a little less than one-third share of the total online sales in Q2 2018.

The latest deal with Urban Ladder adds to Ambani’s growing list of startups supported. The billionaire entrepreneur and among the top 10 richest people on Earth, Ambani has been acquiring startups for quite some time now. Since around September 2018, Reliance has either bought or invested in many startups across industries such as Netradyne, Grab A Grub, C-Square Info Solutions, Reverie Language Technologies, Fynd, Haptik, Easygov, SankhyaSutra Labs, Vakt Holdings, and Embibe. During Reliance’s 43rd AGM in July, Ambani had said “Jio Platforms along with its over 20 startup partners who are now part of our family has built significant world-class capabilities in several cutting edge technologies.”