Avendus, the top investment bank for venture deals in India, on Wednesday confirmed that it plans to raise up to $350 million for its new private equity fund.
The new fund, called Future Leaders Fund III, will enable the Mumbai-headquartered firm to write bigger cheques and maintain a meaningful position in the startups it backs, said its managing partner Ritesh Chandra in an interview with TechCrunch. TechCrunch reported in early April that Avendus Planning to raise new funds,
Avendus has established itself as the largest venture advisor to startups in India, a regular fixture in most growth-stage deals in the country. It provided services in more than 30 deals, including mergers and acquisitions transactions, last year, according to Venture Intelligence, a private market insights platform. The growing size of its private equity unit underscores the firm’s ambitions to cast its net even deeper into the ecosystem and earn greater returns on wins.
The company’s rise to prominence was also contributed by the fact that many of its well-established global competitors, such as Goldman Sachs, Morgan Stanley and JPMorgan, initially paid little attention to the Indian market, allowing Avendus to gain a foothold and build relationships with the country’s emerging tech entrepreneurs.
This relationship is also helping the firm’s private equity unit gain access to some high-profile deals. For instance, financial services startups Juspay and Zeta have largely allowed Avendus on their cap tables as the only ones outside of lead backer SoftBank. “These are businesses that have come out of our relationships and network,” Chandra said.
Avendus’ private equity arm, whose portfolio includes Delhivery, Lenskart, Licious, VerSe Innovation, Xpressbees and National Stock Exchange, has also earned a reputation for providing timely large exits to its backers. For example, both Lenskart and National Stock Exchange returned four times the money invested by Avendus within four years of investment.
“Our fund has a life cycle of five to six years. One of the problems with the Indian startup ecosystem is that investors put in a lot of capital but they don’t get much returns in the long run. We are focused on how we get our money back,” he said.
Despite the growing trend of tech startups going public in India, which was an unusual occurrence just four years ago, investors cannot rely solely on IPOs for returns. According to Chandra, Avendus has established relationships that enable the company to exit its positions by selling stakes to late-stage investors such as sovereign investors, providing an alternative way to generate returns other than an IPO.
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