Peak XV Partners, formerly called Sequoia Capital India and Southeast Asia, earned a massive return of 16X on its total investments in Go Fashion, the parent company of Go Colors, the women’s wear company, market sources told Moneycontrol.
In November 2014, Peak XV Partners invested around $10 million in the women’s legwear maker and has now exited the company with a whopping return of $150 million, translating to a 15-16X multiple on the original investment, at an internal rate of return (IRR) of 43 percent, sources said.
It is understood that the entire sum would now go to the revamped Peak XV team, which separated from Sequoia Capital in the United States and ventured out on its own.
In an interview with Moneycontrol last week, Shailendra Singh, Managing Director of the VC firm, said that the profit-sharing agreement between the VC firms will be dissolved.
"We had something called One Sequoia, which is a global fee and carry sharing pool, which will be dissolved. There are some nuances but you can say the profit-sharing agreement will get dissolved," Singh had told Moneycontrol.
Until last year, Peak XV Partners held around 13.8 percent stake in Go Fashion. However, it launched a block deal in December 2022 to sell a 3.7 percent stake for Rs 228 crore, which effectively reduced its stake to around 10.18 percent.
On June 11, 2023, the VC firm was reportedly in talks to sell the remaining 10.18 percent stake in Go Fashion, marking a full exit. The floor price for the stake sale was around Rs 1,135 per share, about a 5 percent discount as compared to the last closing price, the report added.
The total size of the block deal will be Rs 624 crore. On an INR basis, Peak XV's returns were even higher at around 20X the investment amount, at an IRR of 48 percent, the sources added.
“We liked the core nature of the product, the high frequency of purchase and the high product gross margins seen in this category, with limited fashion and inventory risk. We decided to join hands with Prakash (Saraogi) and Gautam (Saraogi) to help them build Go Colors into a category leader in the space, and in November 2014, Sequoia Capital India invested $10 million as the first outside investor in the company,” GV Ravishankar at Peak XV Partners wrote in a blog post published in 2021.
Chennai-based Go Fashion was founded by Prakash, Rahul and Gautam Saraogi. In 2010, it also counted Nomura India as an investor.
In the quarter ending March 2023, Go Fashion recorded a net profit of Rs 15 crore, up 20 percent against the year-ago period. The company’s total income in Q4FY23 jumped by 34 percent to Rs 160 crore compared to the same period last year.
On Monday, Go Fashion's shares ended the day's session down 4.85 percent at Rs 1,136.10 apiece, BSE data showed.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
