One of the largest venture capital funds, US-based New Enterprises Associates (NEA) is in the final stages of talks with Hong Kong-based secondaries specialist NewQuest Capital Partners to sell its entire India fund, said two people directly familiar with the matter.
“The transaction is closing soon and they are buying the portfolio for a significant discount,” said one of the persons mentioned above. “The way the transaction is structured is that NewQuest will buy at the fund-level, but NEA members will continue to oversee the investments and be on the board seats they hold right now.” The Ken could not independently verify the amount NewQuest is paying to acquire the portfolio.
The decade-old ripe venture capital investing business in India is now going through a churn as most funds are coming to an end of their lifecycle. With that comes the pressure to return capital to the investors. With exits far and few, some of the funds are now busy closing asset sales or selling their entire funds to other private equity funds, also known as secondaries.
NEA’s India fund has been on the block for some time now since Bala Deshpande, its senior managing director, and three other teammates from NEA decided to launch their own fund early last year. Deshpande and her team though are still managing NEA alongside their new fund raise. Currently, Deshpande and her team are on road to raise nearly $250-300 million for their fund MegaDelta Capital Advisors. An email sent to Bala Deshpande and an SMS sent to NEA officials in the USA on 17 September went unanswered. Amit Gupta, founding partner at NewQuest, declined to comment on any specific deal.
NEA had entered India in 2006, by launching NEA IndoUS Venture Partners led by Vinod Dham and Vani Kola. Kola went on to launch her own fund Kalaari Capital in 2012. NEA’s India investment figures are not available publicly, but globally, NEA manages around $20 billion across 16 funds. According to The Wall Street Journal, NEA had raised a $3.3 billion fund last year. Globally, NEA is a multistage investor in the technology and healthcare sectors.
In India, even though the fund is undergoing a sale process, it continues to participate in follow-on rounds of its existing portfolio companies. In fact, NEA had introduced NewQuest’s partner Amit Gupta to most of the investee portfolio company founders some time back. Gupta was in India during the first week of September for deal negotiations, the first person added.
A fortnight ago, one of NEA’s investee firms, Manu Agarwal-led Naaptol Online Pvt Ltd, managed to raise nearly $15 million from its existing investors. Naaptol is an omnichannel shopping platform which counts Mitsui & Co., JP Morgan and NEA as its investors. Omnichannel platforms are those which use both online and offline mediums for sales.