Peak XV Partners clocks 3X returns from Awfis investment in seven years

Of the total 1.4 crore shares that Peak XV owned, it had offloaded 66 lakh shares in the offer-for-sale (OFS) component at the time of the IPO, filings showed.

Peak XV Partners, formerly Sequoia Capital India, clocked a three-fold gain on its investment in Awfis Space Solutions, according to Moneycontrol estimates, less than what it made betting on other startups.

Peak XV invested a total of Rs 206 crore in the flexible workspace provider, which listed on the stock exchanges on May 30, the analysis showed. The VC fund's current holdings in Awfis and the value of the shares it sold before and during the IPO add up to Rs 607 crore as of May 30, which is a 3X return.

That translates into an internal rate of return of 22-23 percent, people close to the company said, which is slightly lower than the average, as per CRISIL's Alternate Investment Funds Benchmarks.

Peak XV Partners did not reply to Moneycontrol's queries.

The fund first invested in Awfis in 2017 and through the years, it acquired 15.2 million shares in the company, giving it a 22.86 percent ownership in the company, according to Awfis’s IPO documents.

The Rs 598.93 crore public offer from Awfis was subscribed 108.17 times. The strong demand meant the company’s early backers including Peak XV Partners benefitted.

The Awfis stock listed at a premium of over 13 percent to the issue price on the National Stock Exchange. However, it gave up some of those gains in line with the broader market trend towards the end of the session.

Since it was an early investor, the weighted average cost of acquisition per share for Peak XV was Rs 135.62, significantly lower than the IPO price of Rs 383 and the closing price of Rs 415.95 on the NSE.

Earnings potential

A weighted average cost of Rs 135.62 a share meant that Peak XV’s total cost of acquisition was Rs 206 crore (total holding of about 15.2 million shares multiplied by Rs 135.62). While the company has already recovered its investment, it stands to earn more.

Days before Awfis filed for the IPO on May 17, Peak XV sold 1 million shares to Ashoka India Equity Investment Trust Plc at Rs 383 apiece, the IPO price. It reduced Peak XV’s holding to about 14.2 million shares, or a 21.36 percent stake.Yes

Peak XV then offloaded 6.6 million shares in the offer-for-sale component of the IPO, the filings showed. These shares earned the company about Rs 253 crore (at Rs 383 a share).

The fund continues to hold 7.6 million Awfis shares worth Rs 316 crore as of the close of trade on May 30.

While there can be a further upside, if the share price falls, Peak XV’s return multiple will also reduce. At the current rate multiple, including the 7.6 million shares that Peak XV owns, the VC fund generated Rs 607 crore on a total investment of Rs 206 crore, which is a 3X return in seven years.

While the return may not be in keeping with a VC fund’s benchmarks as it translates into an IRR of 22-23 percent, it is yet another investment that has given Peak XV an exit.

Peak XV has made handsome returns by betting on Mamaearth (still an investor), Go Colors (Go Fashion), and Indigo Paints, which gave an exit to Peak XV.

Peak XV’s bet on Go Fashion gave it handsome returns of 15X. Peak XV invested about $10 million in the women’s legwear maker and exited with a return of $150 million, Moneycontrol had reported earlier.