Exclusive: Tencent-backed B2B ecommerce marketplace Udaan valued at $7.5 bn

Hiveloop Technology, the Bengaluru-based company that owns B2B ecommerce marketplace Udaan, claims to be valued at Rs 53,365.4 crore ($7.5 billion at prevailing foreign exchange rates) based on projected cash flows and upcoming equity infusions. 

According to a valuation report submitted by Capital Square Advisors, a Mumbai-based merchant banker appointed by Hiveloop Technology to undertake the valuation, the latter was valued at $7.5 billion after taking into account projected cash flows for nine financial years and equity capital infusions expected over a three-year period.

TechCircle reviewed a copy of the valuation report filed recently by Hiveloop Technology with the Ministry of Corporate Affairs.

According to a separate filing, shareholders of Hiveloop Technology, in an extraordinary general meeting held on January 15, 2020, approved a resolution to receive Rs 365 crore ($51 million) in an internal infusion from its Singapore-based parent Trustroot Internet. This is likely part of a larger Rs 999.8 crore ($140.7 million) equity capital infusion that the company expects to receive by March 2020, as detailed in the valuation report.

The valuation report further states that Hiveloop Technology expects equity capital infusions of Rs 910 crore ($128 million) and Rs 1,310 crore ($184.5 million) in the financial years 2020-2021 and 2021-2022 respectively. 

Queries to Hiveloop Technology from TechCircle on the valuation report didn’t elicit responses at the time of publishing this report. 

Hiveloop Technology’s Singapore-based parent, Trustroot Internet, raised a $585 million equity capital round last year from investors such as Chinese technology conglomerate Tencent Holdings, Altimeter Capital, Footpath Ventures, Hillhouse Capital, GGV Capital and Citi Ventures. 

The round, which was announced in October last year, took the total capital raised by Trustroot Internet to $870 million. The company didn’t disclose the valuation at which the round closed. However, digital media publication Entrackr, citing Trustroot's regulatory filings in Singapore, calculated its valuation at north of $2.5 billion at the time.

Read: Soaring valuations and Udaan’s bid to crack the B2B ecommerce code

According to the valuation report cited earlier, the Indian arm, Hiveloop Technology expects to report losses at Rs 499 crore for the period between August 2019 and March 2020, and at Rs 375 crore for the financial year 2020-2021. From financial year 2021-2022, FY22 onwards, the company expects to report profits.

For the financial year ended March 2019, the company’s losses expanded to Rs 338 crore from Rs 59 crore. During the year it reported a 450% jump in total expenditure to Rs 363 crore and a four-fold growth in revenues from operations to Rs 12 crore. In addition, other income, which comes from investments, too almost equalled revenues at Rs 11.6 crore, taking total income to Rs 23 crore against Rs 6.5 crore in the previous year.

Founded in 2016 by former Flipkart executives Amod Malviya, Sujeet Kumar and Vaibhav Gupta, Udaan offers a range of products on its marketplace such as FMCG, lifestyle, electronics, home appliances, kitchen, produce, among other things. It claims to connect 20,000 sellers to three million retailers across 900 cities. However, Udaan has a lot of ground to cover as the total market size consists of 100 million farmers, 15 million small manufacturers and 30 million traders and small retailers.

Udaan counts Jumbotail and Ninjacart as its competition. Other players such as Amazon and Flipkart are also ramping up their operations while Reliance Industries has drawn up plans to set up operations in the kirana shops segment.