Sequoia Capital invests $3 million in Satya Paul owner Genesis Colors
Mumbai: Venture capital investor Sequoia Capital India has invested $3 million of additional capital in its initial public offering (IPO)-bound portfolio firm Genesis Colors Ltd, two people in the know said.
Genesis Colors, the owner of luxury fashion labels such as Satya Paul, plans to sell shares to the public to fund expansion and provide an exit opportunity to its investors. The firm filed its draft IPO papers in September and got market regulator Securities and Exchange Board of India’s (Sebi) approval in February.
“Sequoia has invested around $3 million (Rs21 crore) in Genesis ahead of the company’s planned IPO. The money was invested in two tranches, one in March and one recently in April. The funds are likely be used by the company for ongoing capex and working capital requirements,” said one of the two people aware of the development, requesting anonymity.
Sequoia Capital declined to comment on the development.
“Some recent strategic developments within company are evolving on a dynamic basis and we shall inform you at an appropriate time,” a spokesperson for Genesis Colors said in an email response.
Genesis Colors had filed a draft red herring prospectus with Sebi on 28 September 2016, the spokesperson said, adding that the timing of the IPO will be decided by the company and the selling shareholders in consultation with bankers to the IPO.
Genesis was founded in 1998 by Sanjay Kapoor, Jyoti Narula and Puneet Nanda, Satya Paul’s son. The group’s brands such as Satya Paul, premium lingerie brand Bwitch and an accessories business are housed under Genesis Colors.
Genesis Luxury Fashion Pvt. Ltd, a subsidiary of Genesis Colors, also distributes premium international brands such as Paul Smith, Bottega Veneta, Jimmy Choo and Armani.
The Genesis group has joint ventures with British brand Burberry, Italian menswear brand Canali and Villeroy & Boch of Germany for tableware.
Genesis Colors sells its various brands through 98 exclusive outlets across India and through large format retail stores and other distribution channels.
The firm plans to raise as much as Rs600-650 crore through its IPO, including primary capital of Rs380 crore, which it plans to utilize for buying shares of the company’s subsidiary Genesis Luxury Fashion from Splendor Distributions and promoter Sanjay Kapoor.
The IPO will also see Genesis’s existing investors Henderson Private Equity and Mayfield sell part of their stakes in the company.
In 2008, private equity investors Sequoia Capital and Mayfield put in about Rs110 crore for a minority stake in Genesis Colors. In 2009, the company raised an additional Rs80 crore from Henderson Private Equity.
According to data from Genesis’s draft IPO prospectus, Sequoia Capital is the biggest investor in Genesis Colors, with a stake of about 20%. Henderson Private Equity holds about 13.1% and Mayfield owns 8.5%.
The company reported consolidated revenue of Rs440.2 crore in financial year 2015-16, compared with revenue of Rs426.5 crore in the previous year. It reported a loss of Rs0.74 crore in 2015-16, down from a loss of Rs10.8 crore in the previous year.