Exclusive: Reliance Capital Likely To Exit During Square Yards IPO

Exclusive: Early Backer Reliance Capital Likely To Exit In Square Yards INR 1,500 Cr IPO

SUMMARY

Square Yards is likely to file its DRHP with the market regulator between April and May

The startup has already roped in JM Financial, Bank of America, and Axis Capital to manage its IPO

As per sources, founders, management, and early employees of Square Yards who hold 55% of the equity in the company are unlikely to sell their shares during the IPO

Gurugram-based Square Yards which is heading to become the country’s first proptech startup to go for a public listing is likely to see the exit of one of its early backers. Square Yards, which is gearing for its INR 1,500 Cr IPO in the domestic market, is likely to see Anil Ambani-led Reliance Capital exit, people aware of developments informed Inc42.

Reliance Capital had first invested in Square Yards in 2016 when it pumped in $12 Mn in the startup. At present Reliance Capital holds close to 10% in the integrated real estate platform Square Yards.

Sources aware of Square Yards’ IPO plans informed us that Square Yards IPO will include both fresh issue of shares and offer for sale. The startup is looking at 60%-70% of fresh issue size of INR 1,500 Cr IPO i.e. INR 900 Cr to INR 1,050 Cr worth of fresh issue shares.

The startup will be heading for an IPO at a valuation likely north of $1 Bn, meaning it will become a unicorn.

It has already roped in JM Financial, Bank of America and Axis Capital to manage its IPO.

Another interesting development Inc42 has learnt from its sources is that its founders, management, and early employees who hold 55% of the equity in the company are unlikely to sell their shares during the public listing.

Square Yards will be the second Indian startup in recent times after Falguni Nayar’s Nykaa, where the promoters and top management will continue to hold the majority stake in the company after the IPO. The promoters of Nykaa, the Nayar family, after its blockbuster IPO of INR 5,000 Cr, continue to hold 51% in the company. Typically, in new-age companies, founders dilute their stakes to bring in investors in exchange for capital.

The startup is also looking at raising its pre-IPO round by bringing in new investors to its captable. Inc42 independently couldn’t verify the amount and the investor’s name.

Square Yards was founded in 2014 by a husband-wife duo — Tanuj Shori, an investment banker and IIM-Lucknow alumnus and Kanika Gupta Shori, a Wharton alumnus. Later in 2015, Vivek Agarwal joined Square Yards as a cofounder and CTO of the startup.

The startup is a real estate aggregation and transaction platform which enables the complete lifecycle of owning and living in a home including research, due diligence, selling, financing and more. Square Yards also offers B2B SaaS services to real estate agents, property developers, banks and other financial institutions and is present across global markets like the Middle East, Australia and Canada.

The startup’s various offerings include:

Urban Money: helps customers to get home loans;
Interior Company: helps with interior designing of a place;
Azuro: offers property management.

Over the years, the startup has made five acquisitions. These include Realizing.in, Oryden Tech Labs, Azuro.in, PropsAMC, PropVR. Last year, Square Yards had acquired PropsAMC, a data intelligence, asset management, and real estate services firm. In 2020, Square Yards had acquired Mumbai-based rentals and property management platform Azuro.

The startup had last raised $25 Mn from Hong Kong-based ADM Capital. In 2021, Square Yards sold over 7,500 houses, and rented over 5,000 residences. The startup got mortgage financing for over 10,000 consumers.

In 2021 alone, the startup helped over 100K agents with free leads, technology and marketing tools. Square Yards has managed over 1,000 houses under property management, and completed interiors of over 500 clients. The startup is backed by Kae Capital, AMD, Bennett Coleman (Times Group), Genkai Capital, and others.

The startup earned INR 245.7 Cr from its operations in the financial year ending on March 31, 2021. This is a slight uptick from INR 242.6 Cr it posted in FY20. The startup has posted total revenue of INR 254.6 Cr in FY21 compared to FY20’s INR 244.7 Cr.

Square Yards spent INR 336 Cr in FY21, compared to INR 377.3 Cr it posted under total expenses. The startup has also managed to narrow its loss after tax to INR 81.3 Cr in FY21, from INR 132.8 Cr it witnessed in FY20.

With IPO on cards, Square Yards joins the bandwagon of new age internet companies including the likes of boAt, Ola, Swiggy, PayMate, and BYJU’s who are likely to file their prospectus and head for an IPO before the year ends.