Trifecta Capital to raise Rs 375 crore under greenshoe option: Report

Trifecta Capital has raised Rs 1,500 crore for its maiden equity fund called Trifecta Leaders Fund-I and the venture debt firm is now looking to exercise the greenshoe option to raise another Rs 375 crore in order to capitalise strong investor demand for its fund, according to a Mint report.

A greenshoe option, also known as an over-allotment option, allows the underwriters of an IPO (Initial Public Offer) to buy an additional 15 percent of shares at the listing price.

Trifecta Leaders Fund- I, which was launched in May 2022, focuses exclusively on investing in late-stage Indian Tech startups. So far, the fund has invested around Rs 730 crores in eight well-known companies, namely Livspace, Cars24, Pristyn Care, ixigo, Good Glamm Group, API Holdings (Pharmeasy), and Meesho.

Reportedly, the company plans to deploy the entire fund in 2022, highlighting a solid opportunity for late-stage investments in 2022, following the corrections that have taken place in the tech stocks in the US markets.

Rahul Khanna, managing partner of Trifecta Capital told Mint that they have built a "highly diversified portfolio, with a common line of these companies being category leaders binding them".

"All of them have strong underlying long-term growth prospects. They have demonstrated solid unit economics; in many cases are profitable in certain lines of business and they are incredibly well-capitalized; just the cash on the balance sheets of these companies now is about Rs 17,000 crore, which means that they can get through a good two years without having to raise any more capital," he added.

According to Khanna, there’s a high probability that most of these companies may get liquidated within next 2 years and a few could go for an initial public offering anytime soon.

While the fund invests in crossover opportunities where companies are preparing to go public, Khanna asserted that it is not a pre-IPO focused fund, the report said.

"This is not a pre-IPO fund, and I think now the difference will become much clearer between funds that were trying to arbitrage timing and funds like ours that had a fundamentally long-term view on a structural gap in late-stage venture capital," Khanna noted.

In the view of steep correction in the US tech stocks among other recent developments, Trifecta believes that there’s a good opportunity for late-stage investments in 2022.

“Whatever we’re seeing in the markets, what’s played out in the US and some of that has played out in India too. So, 2022 could also be a very good vintage year for making new investments because some of the valuations would likely correct on new deals as well. Companies that do need capital will raise and hopefully valuations can be more attractive," Khanna explained.

In addition to the enthusiastic domestic response from various insurers, asset management companies, and large family offices, the fund has also seen interest from foreign investors, who are increasingly taking a keen interest in the emerging Indian tech companies. This explains why about 15-20 percent of the fund corpus is expected to flow in from investors abroad.