Mumbai: After six successful exits in the past year, venture capital firm Sequoia Capital India has raised its second growth fund of $725 million (Rs3,168 crore). The firm, that now has two growth and three venture funds in India, will manage a total capital of $1.8 billion. It has at least five more exits lined up through public listing of its portfolio companies.
“We expect multiple initial public offerings (IPOs) in the next 12-18 months,” says Sumir Chadha, managing director at Sequoia Capital India. “There is a lot of investor interest and we are not too worried about (market) cycles.” According to the firm, the companies likely to go public are Bharti Telesoft Ltd, AppLabs Technologies Pvt. Ltd, SKS Microfinance Pvt. Ltd, GlobalLogic Inc. and Indecomm Global Services.
The new fund comes on the heels of the company’s exits through IPOs of companies such as Edelweiss Capital Ltd, ICICI OneSource Ltd (formerly First Source), Idea Cellular Ltd, and the sale of Brainvisa Technology Pvt. Ltd (acquired by Indecomm), marketRx Inc. (acquired by Cognizant Technology Solutions Corp.) and Zavata Inc. (acquired by Apollo Health Street).
New fund: Sumir Chadha (left) and K.P. Balaraj, two of the founding partners of Sequoia Capital, which has invested in 55 companies. Photograph: Hemant Mishra / Mint
Sequoia, which began operations in 2000 as Westbridge Capital Partners, has generated more than $100 million through exits, mostly involving investments from its first fund. Sequoia has invested in 55 companies across its first four funds. Its latest growth fund, nearly twice as large as its first, will raise the cap on deal size for the firm. While most of its earlier growth deals were an average size of $25 million, “we can go up to $60-70 million in a single deal”, says managing director Sandeep Singhal. It will continue to focus on high-growth firms in its existing sectors of retail, pharma and telecom, but is also open to new areas such as real estate.
A majority of Sequoia’s capital continues to come from limited partners (LPs)—institutions that back equity funds—in the US. All LPs on its fifth fund are repeated from previous funds.
Since it first diversified into growth equity, Sequoia has raised three funds in as many years, including a $400 million growth fund in 2006 and a $300 million early-stage fund last year. The last growth fund has been almost fully invested across 18 companies, including Amalgamated Bean Coffee Trading Co. Ltd (which runs the Café Coffee Day chain) and designer clothing company Genesis Colours Pvt. Ltd (which owns the Satya Paul brand). Sequoia has made eight investments from last year’s early-stage fund, while the first two venture funds are fully invested as well.
Sequoia Capital India has promoted executive director Abhay Pandey to the post of managing director. He joins the ranks of Chadha, Singhal, K.P. Balaraj and Surendra Jain—the four founders of Westbridge Capital Partners, which merged with Sequoia in 2005. The firm has 10 investment partners, who can take board seats on its portfolio companies.