Avendus, the leading investment bank for business 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 bigger checks and maintain a significant presence in the startups it backs, managing partner Ritesh Chandra said in an interview with TechCrunch. TechCrunch reported in early April that Avendus was preparing a plan to raise new capital.
Avendus has established itself as the largest venture advisor for startups in India, a regular program in most growth stage deals in the country. It provided services on more than 30 deals last year, including M&A transactions, according to Venture Intelligence, a private market intelligence platform. The growing size of the private equity unit underscores the company’s ambitions to entrench its tentacles even deeper into the ecosystem and have more earnings upside.
The company’s rise was aided by the fact that many of its 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 up-and-coming tech entrepreneurs.
This relationship also helps the firm’s private equity unit gain access to some of its high-profile deals. Financial services startups Juspay and Zeta have largely only allowed Avendus outside of SoftBank’s main backing on their capital desks, for example. “These are businesses that have come out of our relationships and networks,” Chandra said.
Avendus’ private equity unit, whose portfolio includes Delhivery, Lenskart, Licious, VerSe Innovation, Xpressbees and the National Stock Exchange, has also earned a reputation for delivering big payouts to its backers on time. LensKart and the National Stock Exchange, for example, both delivered four times the money Avendus invested in within four years of investment.
“The life cycle of our fund is five to six years. One problem with the Indian startup ecosystem is that investors have thrown in a lot of capital but don’t see much return 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 uncommon just four years ago, investors cannot rely solely on IPOs for returns. According to Chandra, Avendus has built relationships that allow the company to exit its positions by selling stakes to late-stage investors such as sovereign investors, providing an alternative route to generating returns outside of IPOs.
