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BENGALURU : Furniture marketplace Pepperfry plans to file for an initial public offering (IPO) in the first half of 2022 and complete the pre-IPO funding round by the end of this year, a top company executive said.

The omnichannel retailer claims it was on the cusp of profitability last year but has focused on growth instead.

While the company has started working towards a public listing, it is also ramping up its offline presence by expanding its store network in metros and smaller cities. Pepperfry stores are primarily experiential centres and not for selling products.

“We are raising a pre-IPO round of between $50-100 million. While we have enough money in the bank, we will raise more money to align a good set of investors on our side before we hit the IPO. We have been fortunate to have marquee investors on our board and would like to get a similar cohort of great names," Ashish Shah, co-founder and chief operating officer, Pepperfry, said in an interview.

In a relatively young online furniture market, Pepperfry competes with vertical e-tailers (which specialize in one category) and horizontal players such as Amazon India and Flipkart (that sell products across categories), which have been ramping up their furniture offerings.

There has also been a fair bit of consolidation with Reliance Industries Ltd (RIL) acquiring online furniture seller Urban Ladder Home Decor Solutions Pvt. Ltd last year, expanding its presence in India’s fast-growing e-commerce market.

Since 2018, Pepperfry has working to turn profitable and has focused on bringing down costs and paring losses.

“In August last year, we were close to profitability. Until the second wave, we had a great ride in business. But we also realized that we can turn profitable at our will. This year, we decided to grow the business significantly. So, the focus is on high growth now," Shah said.

Pepperfry posted a 26% increase in revenue to 260.61 crore and trimmed losses by 33% to 122.31 crore in 2019-20.

Earlier this year, Pepperfry received 35 crore from InnoVen Capital, the third investment by the venture debt and specialty firm in the online furniture marketplace.

In September 2020, Mint first reported that Pepperfry was looking to launch an IPO within 12-18 months. Co-founder and CEO Ambareesh Murty had then said that for an IPO, a track record of at least 6-9 months of profitability is important to show the business can make money.

According to a report by RedSeer Consulting, the online furniture business has increased its share owing to experience stores and different models offering quality furniture at affordable prices.

The online furniture market has been growing at a CAGR of 80-85%, dominated by metros and tier-1 cities and driven by the ease of comparing products and the low prices offered.

Furniture sales touched $700 million in 2019-20, but online had less than a 3% share in the overall furniture market, which is pegged at $17 billion.

With furniture being a non-essential category, business was impacted during the lockdowns due to the first and second waves.

Post the second wave, Shah said the business bounced back since July. The company has launched its 100th studio in Lucknow to ramp up its offline presence.

“Omnichannel is a key strategy for us, and with these stores, we are also activating newer and smaller markets," he added.

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