Ecommerce Company Udaan announced it has suggested a financing deal of approximately $160 million, which includes new equity, additional debt, and the conversion of some of its existing convertible bonds into equity.

Current shareholders along with a new investor will inject new equity capital, while some bondholders will exchange a portion of their holdings for stock. The outstanding convertible debt will be prolonged under updated conditions.

Independently, one of the globe's leading investment management companies has dedicated around $45 million in new funding via its private credit platform, enhancing Udaan's financial standing and aiding its future expansion strategies.

Udaan did not reveal the names of the investors. Current investors, such as M&G Investments and Lightspeed Venture Partners, took part in the funding round alongside fresh investor, global asset manager BlackRock, as per reports.

The deal would enhance Udaan's balance sheet, streamline its capital structure, and offer more financial flexibility as the firm seeks its next growth phase and moves forward with plans for a potential initial public offering (IPO).

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Vaibhav Gupta, co-founder and CEO of Udaan says, "This funding round represents a significant step in Udaan's quest to establish a sustainable, profitable, and institutionally strong business. Throughout the past several quarters, we have steadily enhanced our operating performance by achieving substantial growth while greatly bolstering profitability and cash efficiency. Having a more robust balance sheet and a streamlined capital structure, we are poised to keep enhancing customer value, strengthening our market dominance, and advancing our long-term public market goals.

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During the 10-quarter stretch from Q4 of calendar year 2023 (Q4CY23) to Q1 CY26, the firm achieved roughly 25 percent compound annual growth rate (CAGR) in revenue, enhanced contribution margins by almost 500 basis points (bps), and decreased EBITDA burn by about 70 percent. Udaan announced that its largest operating cities and clusters are now ebitda profitable, indicating ongoing progress toward profitable growth and the scalability of its cluster-driven operating model.

Ebitda refers to earnings prior to interest, taxes, depreciation, and amortization.

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The firm stated that it is still broadening its range of higher-margin ventures, with the private label segment currently accounting for 15-25 percent of sales of essentials like rice, wheat, and pulses in various cities of operation.This has aided the company in enhancing earnings quality while boosting operating leverage and unit economics.