DFJ’s 3-year Quest Ends at Hong Kong Co’s Doors

Bengaluru
EXIT MODE Tesla & SpaceX investor sells almost entire India portfolio to NewQuest Cap Partners at discounted valuations
Draper Fisher Jurvetson (DFJ), an investor in Elon Musk’s electric-car company Tesla and spacecraft maker SpaceX, has sold nearly its entire India portfolio to NewQuest Capital Partners, inching closer to ending a three-year hunt for buyers.The venture capital firm sold its holdings in 8-10 domestic companies to Hong Kong-based NewQuest at discounted valuations, four people aware of the transaction said, with one of them adding that such deals are typically done at “cents on the dollar“. Deal terms could not be ascertained.

DFJ’s portfolio sale is the third such deal in as many years by a Silicon Valley investor. Experts said such secondary sales are bound to increase as venture capital and private equity firms approaching ends of their typical 7-10-year investment cycles scramble to sell holdings and return money to their investors. Listing on stock exchanges is not yet a viable option for several startups seeking to provide exits to their investors.

DFJ’s domestic portfolio has been on the block since the firm shut its India office in 2013, according to sources, who declined to be identified. “(DFJ) had initially put a portfolio of nearly a dozen companies on the block with a net asset value of $60 million (about `. 400 crore),“ one of the sources said.

Net asset value, in this context, is inherent value of a firm’s investments based on latest valuations of portfolio companies.

DFJ invested in about a dozen companies in India through its US-based fund after opening office here in 2007. It has not made any fresh investments in the country since 2012-2013 after its then Bengaluru-based MD Mohanjit Jolly returned to the US.

“Jolly, who was the partner managing the deals for DFJ (in India), will help NewQuest manage the portfolio as he knows these companies well,“ a second source said.

DFJ founder Steve Jurvetson did not reply to emails from ET and NewQuest Capital’s chief operating officer Amit Gupta declined to comment. Jolly could not be reached for comments.

NewQuest bought DFJ’s stakes in companies including travel website Cleartrip, electronic-waste management firm Attero Recycling, renewable energy company Bharat Light and Power, mobile advertising firm RevX, online photography company Canvera, the sources said. The specialist secondary investor that was spun off from Bank of America-Merrill Lynch in 2011has more than $1billion under management, with a focus on China and India.

Secondary portfolio sales are complex and rare as these involve multiple companies.But such transactions allow investors to sell portfolio companies in one shot rather than in piecemeal deals, which would require more time and management bandwidth.

“These portfolio sales are getting a bit more common, which is a good sign that there is appetite (for Indian companies),“ said Sanjeev Krishan, leader-private equity practice, at consulting firm PwC India.“Buyers get immediate access to a number of investee companies, some of which will be good assets while others not, but sellers are able to get a competent price for it.“

In 2014, Kleiner Perkins Caufield & Byers, along with Sherpalo Ventures, sold its India portfolio of six investments to Lightbox Ventures, a new firm floated by its former local representative Sandeep Murthy. Last year, Canaan Partners sold its India portfolio of nearly a dozen companies to JP Morgan Asset Management in a deal pegged at about $200 million.

Source: The Economic Times
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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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