Something strange is happening at Sequoia.

On September 13, the financial daily Mint reported that Sequoia India is in talks to sell stake in eight firms for $200 million. The idea is to rationalise its India portfolio of over 130 companies. To quote from the Mint story:

“It is common for limited partners (or investors who put money into private equity and venture capital funds) to sell their stakes in the secondary market, but it is not so common for a general partner, or the manager of a fund (the private equity or venture capital firm itself) to sell its stake, an expert said on condition of anonymity.”

Still, there could be good reasons for this, he added.

“… achieving liquidity at the optimal time for maximising internal rate of return; reducing concentration risk and locking in early returns; reallocating and retooling investment strategy; eliminating non-strategic investments; and creating strategic partnerships to share investment risk and return…”

Hold on a second. It appears secondary sales are simultaneously not so common but also the greatest thing since sliced bread. Which one of the above is it?

Well, this is that story. And we started, right at the basics. To understand if there’s a clean-up or strategic change or some sort of pressure building at the firm to show exits. Or simply put, what’s going on? What we found is this:

It is quite likely you’ve never heard of Madison India Capital before. The Delhi-based firm claims it is one of India’s leading private investment firms specialising in the consumer, business services, technology and financial services industries. What Madison India Capital actually does is take a deal or a mandate and rustle up the (usually foreign) investors who might buy it. A sort of cross between an investment bank and search.

They’ve been at it for quite a while. Interestingly one of their last big plays was during the last big secondary transaction in India. In 2015, when Canaan Partners was looking to sell its entire portfolio.

Right about time to introduce a character in our story. A person in Madison’s advisory board called Surya Chadha. Who is Surya? For now, this should suffice: Surya is the brother of Sumir Chadha. Who is Sumir? He is the co-founder and managing director at Westbridge Capital Advisors.

Don’t rush or fret. The connection between Surya, Sumir, Madison and Sequoia will be clear to you as you read ahead. Now, back to Madison.

“Madison and Surya teamed with Alok (Alok Mittal was the head of Canaan India) and bid for Canaan’s India portfolio,” said an investor who requested not to be named because he is not allowed to speak with the media. “But even though they bid 10% higher than JP Morgan, Canaan sold its entire portfolio to JP Morgan because they felt there was a solidity and certainty to JP Morgan, versus going with a new entity.”

Mittal and Madison lost the Canaan deal to JP Morgan.