Avendus, India's leading venture trading investment bank, confirmed on Wednesday that it plans to raise up to $350 million for a new private equity fund.
The new fund, called Future Leaders Fund III, will enable the Mumbai-based company to write larger checks and maintain a meaningful position in the startups it supports, managing partner Ritesh Chandra told TechCrunch in an interview. TechCrunch reported in early April that Avendus was looking to raise new funding.
Regularly participating in most growth-stage deals in India, Avendus has established itself as the largest venture advisor to startups in the country. Last year, it served more than 30 transactions, including mergers and acquisitions, according to Venture Intelligence, a private markets insights platform. The growing size of the private equity sector highlights firms' ambitions to extend their tentacles deeper into the ecosystem and gain more upside from their prizes.
The company's rise to prominence was aided by the fact that many of its established global competitors, such as Goldman Sachs, Morgan Stanley and JP Morgan, initially paid less attention to the Indian market, allowing Avendus to gain a foothold and build relationships. We work with emerging technology entrepreneurs in the country.
These relationships also help the company's private equity division gain access to some important deals. For example, in addition to major backer SoftBank, financial services startups Juspay and Zeta only allowed Avendus on the cap table. “This is a business that comes from our relationships and networks,” 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 delivering large returns to sponsors in a timely manner. For example, LensKart and National Stock Exchange both delivered four times the amount invested by Avendus within four years of investing.
“The life cycle of our fund is 5 to 6 years. The problem with the Indian startup ecosystem is that investors pour in a lot of capital but do not generate long-term profits. We are focused on how we can get our money back,” Chandra said.
Despite the growing trend of listing tech startups in India, a phenomenon that was uncommon just four years ago, investors cannot rely solely on IPOs for returns. According to Chandra, Avendus has built relationships that allow companies to liquidate positions by selling stakes to later-stage investors, such as Treasury investors, which provides an alternative means of generating revenue separate from an IPO.
