Avendus, the leading investment bank for venture deals in India, confirmed on Wednesday that it is looking to raise up to $350 million for its new private equity fund.
The new fund, called Future Leaders Fund III, will allow the Mumbai-based firm to write larger checks and maintain a significant position in the startups it backs, its managing partner Ritesh Chandra said in an interview with TechCrunch. TechCrunch reported in early April that Avendus was develop a plan to raise a new fund.
Avendus has established itself as the largest venture advisor for startups in India, a common fixture in most growth-stage deals in the country. It served on more than 30 deals last year, including M&A transactions, according to Venture Intelligence, a private market insights platform. The growing size of its private equity unit underlines the company’s ambitions to root its tentacles even deeper into the ecosystem and reap more benefits from profits.
The company’s rise to prominence was aided by the fact that many of its well-established global rivals, such as Goldman Sachs, Morgan Stanley and JP Morgan, initially paid less attention to the Indian market, allowing Avendus to gain ground and build relationships. with the country’s burgeoning technology entrepreneurs.
That relationship is also helping the company’s private equity unit gain access to some of the high-profile deals. For example, financial services startups Juspay and Zeta have largely only allowed Avendus outside of title sponsor SoftBank in their cap tables. “These are businesses that grew out of our relationships and networks,” Chandra said.
Avendus’s private equity unit, whose portfolio includes Delhivery, Lenskart, Licious, VerSe Innovation, Xpressbees and National Stock Exchange, has also earned a reputation for delivering big exits to its backers at the right time. LensKart and the National Stock Exchange, for example, gave away four times the money Avendus invested in four years of investments.
“The life cycle of our fund is five to six years. One problem with the Indian startup ecosystem is that investors have invested a lot of capital but do not see many returns over a long period of time. “We are focused on how to get our money back,” he said.
Despite the growing trend of tech startups in India going public, a phenomenon that was rare just four years ago, investors cannot rely solely on IPOs for profits. According to Chandra, Avendus has established relationships that allow the company to exit its positions by selling stakes to late-stage investors, such as sovereign investors, providing an alternative avenue to generate returns outside of IPOs.