In a significant move within India’s venture capital landscape, Chiratae Ventures, renowned for its early-stage investments in companies like Lenskart, FirstCry, and Policybazaar, has undertaken a strategic stake sale in select portfolio firms to Madison India Capital, sources familiar with the matter revealed.
The transaction, deemed as a bulk secondary deal, is estimated to have conferred a collective valuation of approximately $70 million to the stakes involved. Noteworthy shares in high-profile entities such as omni-channel eyewear retailer Lenskart were part of this deal.
According to insiders, Bengaluru-based Chiratae, previously known as IDG Ventures, executed the sale from its Fund-II, valued at $95 million, and Fund-III, which boasted $208 million in capital.
“The transaction was completed a few months ago after Chiratae decided to offload shares in some of its companies… The $70-million cash exit will be an overall good return for them, as the two funds (Fund II and III) were small in size…” commented an anonymous source closely associated with the deal.
Madison India Capital, backed by New York-headquartered Lexington Partners, specializes in secondary transactions. In a similar vein, Madison had previously invested $180 million in Sequoia Capital India’s portfolio firms in 2017, including notable names like Pine Labs and Snapdeal.
“In the current market, we are seeing funds explore secondaries at a portfolio level and we expect that to gain momentum, as the need to demonstrate DPI increases,” remarked another source privy to the developments. Distributed to paid-in capital (DPI) is a term used to measure the total capital that a fund has returned to its investors.
Chiratae Ventures, founded in 2006 by Sudhir Sethi and TCM Sundaram, initially operated as the Indian arm of US-based IDG Ventures. With a focus on supporting early-stage technology startups, the firm has been actively engaged in raising its fifth India-dedicated fund.
“The lacklustre performance of most Indian venture capital funds, after raising record capital, clubbed with the tepid funding environment, has forced VCs to look for ways to cash out,” the source continued.
Such secondary portfolio sales by funds prove effective when presenting a diverse mix of companies to potential buyers. “Typically, the incoming investor is presented with a mix of companies from a particular fund, but it can be customised across funds picking,” explained an individual familiar with the deal dynamics.
Chiratae’s significant exit from Lenskart occurred last year, wherein it cashed out more than $100 million from the Gurgaon-based firm in a $500-million secondary round that witnessed the participation of the Abu Dhabi Investment Authority.
With the current transaction and its continued stake in Lenskart, Chiratae Ventures stands poised to bolster its position in the ever-evolving landscape of venture capital investments in India.
