**Urban Company to Wind Down Saudi Subsidiary Amid Financial Struggles**
Urban Company, backed by Tiger Global, is set to close its step-down subsidiary in Saudi Arabia due to ongoing financial challenges, as revealed in its draft red herring prospectus (DRHP). The home-services provider announced plans to transfer its Saudi operations to a newly established joint venture, Waed Khadmat Al-Munzal for Marketing, which commenced operations on January 1, 2025. This move aims to facilitate the winding down of Urban Company Arabia for Information Technology (UCAIT).
UCAIT has reported significant financial losses, with a pre-tax loss of ₹23.45 crore for the nine months ending December 2024, a sharp increase from ₹8.29 crore in the previous year. The losses for the fiscal years were ₹14.08 crore in 2023-24, ₹17.77 crore in 2022-23, and ₹10.10 crore in 2021-22. The DRHP indicates that UCAIT was Urban Company’s operational arm in Saudi Arabia, as evidenced by its standalone financials.
Urban Company’s expansion into the Saudi market was initiated in 2024 through a partnership with Saudi Manpower Solutions Company (SMASCO). The joint venture, Waed Khadmat Al-Munzal for Marketing Co., aims to enhance the domestic service landscape in Saudi Arabia. While the DRHP does not explicitly state it, the financial details suggest that this joint venture will take over UCAIT’s responsibilities moving forward.
Currently, Urban Company operates in three international markets: the United Arab Emirates (UAE), Singapore, and Saudi Arabia. The company previously had a presence in Australia but exited that market in 2022 after three years of operations.
In addition to these developments, Urban Company has filed its DRHP for a ₹1,900 crore initial public offering (IPO) with the Securities and Exchange Board of India (Sebi) on April 28. The IPO includes a fresh issue of ₹429 crore and an offer for sale (OFS) of ₹1,471 crore, which will see partial exits from early investors. Accel India is expected to be the largest seller, aiming to raise up to ₹433 crore, followed by Elevation Capital, Tiger Global, VYC11, and Bessemer India.
In preparation for the IPO, Urban Company’s co-founders—Abhiraj Singh Bhal, Raghav Chandra, and Varun Khaitan—sold shares worth approximately ₹780 crore through secondary transactions between September 2024 and March 2025. These transactions involved existing backers such as Prosus Ventures and Dharana Capital. Notably, the founders will not participate in the OFS component of the IPO.
Financially, Urban Company reported a profit before tax of ₹27.1 crore in the first nine months of 2024-25, marking a significant turnaround for the company.
**FAQ**
**What led Urban Company to wind down its Saudi subsidiary?**
Urban Company decided to wind down its Saudi subsidiary, UCAIT, due to ongoing financial losses and is transitioning operations to a new joint venture to enhance its service offerings in the region.
