B2B e-commerce startup Udaan has raised $160 million through a structured financing deal after reaching a major debt settlement with its lenders. The agreement has helped the company avoid insolvency proceedings and strengthen its financial position as it prepares for its planned initial public offering (IPO).
The latest funding is an important step for the Bengaluru-based company, which has spent the last few years cutting losses, improving profitability and simplifying its business operations. Although its revenue has fallen recently, Udaan has continued to reduce its losses through cost-cutting measures and a stronger focus on profitable business segments.
Udaan Settles Debt, Avoids Insolvency
Udaan’s Singapore-based parent company, Trustroot Internet Pvt. Ltd., had failed to repay $170 million worth of compulsorily convertible notes (CCNs) that matured on June 30, 2026. After the default, a group of international lenders filed insolvency and winding-up proceedings against the company in the Singapore High Court.
To resolve the issue, Udaan reached a settlement covering total claims of around $178 million, including interest.
Under the agreement, the company will pay $35 million in cash to lenders immediately. Another $65 million will be converted into new secured convertible bonds with an annual interest rate of 13% to 15%. These bonds will mature in December 2028.
The remaining $78 million of debt will be converted into preferred convertible shares, giving lenders a higher priority than existing shareholders. The remaining convertible bonds will also be extended under new terms.
Along with the debt settlement, Udaan announced a new $160 million financing package to support its business and prepare for its IPO.
The funding includes $50–60 million in fresh equity from existing investors such as Lightspeed Venture Partners and M&G Investments, along with a new investor whose name has not been disclosed.
Global investment firm BlackRock has also provided $45 million in private credit, which will have the same repayment priority as the newly issued secured bonds.
In addition, Lightspeed, Udaan’s biggest shareholder with around a 33% stake, has converted a $40 million super senior loan into preferred equity. This move further improves the company’s balance sheet.
Part of the new funding will be used to pay creditors, cover advisory and restructuring costs, and support business operations over the next 12 months. Reports also suggest that Udaan is planning to raise another $150–200 million in equity funding.
Valuation Drops as Company Focuses on Long-Term Growth
The latest funding values Udaan at around $1.6 billion to $1.7 billion. This is slightly lower than its $1.8 billion valuation during its funding round in June 2025.
The company’s value has fallen significantly from its peak valuation of $3.2 billion in 2021. However, Udaan believes the lower valuation reflects its shift from rapid expansion to building a stronger and more sustainable business.
Lightspeed remains the company’s largest shareholder, while DST Global and M&G together own more than 15% of the business. The combined shareholding of founders Vaibhav Gupta, Sujeet Kumar and Amod Malviya has now reduced to around 12.5%.
Since it was founded in 2016, Udaan has raised nearly $2 billion through different equity and debt funding rounds to build its wholesale e-commerce business.
Cost Cutting Helps Udaan Reduce Losses Ahead of IPO
Over the past two years, Udaan has changed its strategy from chasing rapid growth to improving profitability.
In FY24, the company reported revenue of ₹5,706.6 crore and reduced its net loss by 19% to ₹1,674.1 crore. During the same period, it also laid off around 10% of its workforce.
In FY25, Udaan reduced the size of its operations, leading to a 20% drop in revenue to ₹4,561 crore. However, the move helped the company cut its net loss by 37% to ₹1,055 crore.
The company has also reduced its presence from more than 1,000 cities at its peak to 16 major regional clusters with around 25 warehouses. It now serves nearly 2 lakh kirana stores while focusing mainly on high-margin categories such as FMCG, groceries and staples.
Udaan’s private-label products now contribute around 15% to 25% of its staple sales. Its Bengaluru business has already achieved EBITDA profitability, showing that the company’s new strategy is delivering results.
The company has also expanded its business through Horeca360, which serves thousands of hotels and restaurants in Bengaluru and has become an important source of revenue in the city.
As part of its IPO plans, Udaan has already received approval from the National Company Law Tribunal (NCLT) to merge its technology, logistics and wholesale businesses into one Indian entity. It is also shifting its headquarters from Singapore to India through a reverse flip to meet the expectations of Indian public markets.
With a stronger balance sheet, lower debt and better financial performance, Udaan is now working towards launching its IPO within the next 9 to 18 months while aiming to achieve group-level break-even during the same period.