Sequoia Capital India, an arm of the Silicon Valley fund that backed Apple and Google, is looking for partial exits from some of its portfolio companies ahead of the gestation period. The venture capital firm is looking to “unlock” values in Indian companies such as CarDekho, Dailyhunt, Healthkart, Meesho, ixigo and Turtlemint, among others, as they ready themselves for initial public offerings (IPOs).
These firms are profitable with strong revenues and margins, and are, therefore, expected to command good valuations. The listing of these portfolio companies would help Sequoia to unlock value ahead of the investment period which it would otherwise have needed to do via secondary sales, sector experts pointed out.
The companies are expected to be IPO-ready within the next 2-3 years. Generally, Sequoia stays invested in a company for an average of 8-10 years.
Sequoia expects auto tech player CarDekho to post revenues of Rs 1,400 crore for FY23, persons familiar with the development indicated to FE. The company is profitable in the new auto and finance segments, and is close to breaking even in insurance, even though it is burning cash at the operating level in the used cars segment and Southeast Asia. The company is expected to turn group-Ebitda profitable by mid-FY24 and net profitable later.
Fintech company Cred is expected to close March with an accounting rate of return (ARR) of `2,000 crore given its a customer acquisition cost (CAC) of Rs 100 and the average revenue per user of Rs 2,000 as of February The company has 10 million monthly active users (MAUs), 8 million monthly transacting users and 2.7 million daily active users (DAUs).
Dailyhunt, a vernacular content and news aggregator platform, gets 240 million app MAUs and 30 million DAUs, generating $200-million (about Rs 1,600-crore) ARR, while its short-video app Josh garners 180 million MAUs, 80 million DAUs and fetches an ARR of $65 million (Rs 520 crore). Josh is incurring an operating loss while Dailyhunt is expected to exit March 2023 with 12% Ebitda margins, an investor presentation showed.
Messaging platform Gupshup’s revenues grew 57% y-o-y to $218 million in calendar year 2022, while it has broken even at Ebit levels. Online marketplace Healthkart expects to post Rs 900 crore in revenues for FY23, with 65% y-o-y growth and about 7% Ebitda margin. It expects to turn group level Ebitda profitable by FY25.
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Travel portal Ixigo expects gross transaction value (GTV) of Rs 7,500 crore and post profit (both Ebitda net profit), along with positive operating cash flows in FY23. E-commerce player Meesho currently has a GMV run rate of $4.4 billion (Rs 35,200 crore) with revenue of $750 million (Rs 6,000 crore) and expects FY23 Ebitda margin of about 2.7%. Logistics player Porter would exit March 2023 with $300-million (Rs 2,400-crore) ARR and 15-20% gross margins, while Turtlemint, a distribution platform for insurance products, is also poised to record growth.
Sequoia launched its first India fund in 2007 and has successfully exited from multiple companies via IPOs post Covid.