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Exclusive: Ola investor Matrix eyes $75m cash gain in secondary sale, $400m new fund

Matrix Partners India is one of the country's largest venture capital firms, but its gains from startups have paled compared to peers. Now Matrix is looking to fix that by selling a stake in Ola, even as its other lucrative bets lead to a record $400 million new fund.

Mumbai / May 10, 2021 / 04:50 PM IST

Matrix Partners India, an early investor in ride hailing unicorn Ola, is planning to sell a portion of its stake in the company to existing investors for about $75 million, a key move to return cash to its own investors before raising a new fund later in the year, sources said.

Matrix, one of the India’s largest venture capital firms with over a billion dollars deployed in the country, is selling 2-3% of its stake at a company valuation of $3.5 billion. After the stake sale, it will still own about 6% of Ola (ANI Technologies Pvt Ltd), said the people, who requested anonymity.

Ola’s founder Bhavish Aggarwal has been more controlling than most founders, curtailing his investors’ rights and boosting his own, and has blocked secondary share sales - like the one Matrix is currently executing - in the past. Matrix getting $75 million cash from its Ola shares would be a massive shot in the arm for the VC firm, which has otherwise had a relatively poor track record of exits from its investments.

However, Ola’s valuation currently is subdued due to the Covid-19 pandemic, down from its peak of about $6 billion in 2019.

Moneycontrol couldn't ascertain the buyer's name in the secondary share sale immediately.

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Matrix has had exits of about $100 million so far across its three funds and 15 years of existence, said a person aware of the matter, requesting anonymity. This pales in comparison to peers such as Nexus Venture Partners, Lightspeed India, Sequoia India and Accel, whose funds have returned far more so far, and whose current bets look lucrative as well, although lack of large cash exits has plagued VC firms in India for years now.

Matrix has had a number of small exits, but its largest exit is $60 million from classifieds platform Quikr and womenswear maker W, as per data from Venture Intelligence. In comparison, other VC firms have got hundreds of millions, if not more from the likes of Flipkart, Paytm, Oyo, FirstCry and Policybazaar, among others.

Over the last few months however, Matrix’s bets look lucrative too, and its stakes in payments firm Razorpay, lenders Five Star Business Finance and OfBusiness and content firm Dailyhunt represent significant wealth. Razorpay was recently valued at $3 billion, Five Star Finance  and Dailyhunt were valued at over a billion dollars, and OfBusiness was valued at $800 million. Matrix’s shares in these four companies alone is worth over a billion dollars. These gains are on paper, and haven’t materialised to actual cash, but the VC firm is holding on to them expecting the shares to be even more valuable in the next few years.

Led by these successes, Matrix is preparing to raise a $400 million fourth fund later this year- its largest so far, and for which the Ola share sale serves as a precursor. 

matrix-partners-india

An Ola spokesperson declined to comment, while Matrix did not respond to detailed emails seeking comment.

“Ola was Matrix’s claim to fame for the longest time. But now they are showing 4-5 other companies of real scale. They’re getting cash from Ola so that when they go to the raise, they can tell LPs they have exits. Exits are always the biggest question from LPs” said a partner at another VC firm, requesting anonymity.

Limited Partners, or LPs are the people who invest in venture funds- billionaire family offices, pension funds, university endowments, etc.

“The current bull market has been good to all VCs, marking up their investments, but if paper valuations are any metric, Matrix looks well-perched. You could not have said that six to eight months back,” the VC added.

Matrix’s plans to raise its largest fund yet also signals the startup and funding boom enveloping India, with record valuations, new unicorns and more money than ever before.

Matrix was founded by Avnish Bajaj and Rishi Navani in 2006. Bajaj was the co-founder and CEO of Baazee, which was later acquired and became Ebay India, while Navani was a former McKinsey executive and an investor with Westbridge Capital. Matrix raised a $300 million first fund in 2006, and another $300 million in 2011. In 2016 it raised $110 million to top up its second fund, and raised a full third fund of $300 million in 2019. However in 2015, co-founder Navani left to start his own firm, Epiq Capital.

Besides Bajaj, Matrix India’s current leadership has three managing directors- Vikram Vaidyanathan, Tarun Davda and Rajat Agarwal.
M. Sriram
first published: May 7, 2021 08:22 am

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