New Delhi, July 2 -- Venture capital firm Chiratae Ventures has made an exit move from a company it first backed from its third fund nine years ago and has lined up another liquidity move, setting the stage to collect half the investment vehicle's entire corpus from a single bet.

The homegrown VC firm marked the final close of its third fund in early 2017 with $207 million (about Rs 1,366 crore then) in commitments, crossing its target of $200 million. This fund invested in over a dozen companies including Lenskart, Rentomojo, Bizongo, Curefit, Playshifu, Healthplix and Fibe (previously known as EarlySalary), according to VCCEdge.

In the latest development, Chiratae sold part of its holdings in Fibe a couple of months ago and now intends to sell some more stake through the digital lender's planned initial public offering.

Fibe, operated by Social Worth Technologies Ltd, has filed its draft prospectus for an IPO that involves a fresh issue of shares to raise Rs 750 crore and an offer for sale of about 40 million shares by its investors.

Chiratae, earlier known as IDG Ventures India, intends to sell about 3.94 million shares in the IPO. Other investors that are selling shares include private equity firm TPG's The Rise Fund, VC firms Norwest Venture Partners and Eight Roads, secondaries-focused PE firm TR Capital, and Piramal Finance Ltd. TPG holds a 23.26% stake in Fibe, Norwest owns 13.38%, Eight Roads owns 13.02%, TR Capital holds 5.92% and Piramal Finance 7.06%.

Chiratae's investments, exits and returns

The VC firm's third fund first invested in Fibe's Series A round in May 2017 and then took part in B and C rounds. In total, the fund and an affiliate invested about Rs 75.4 crore in Fibe during 2017-2019, according to VCCircle calculations based on information disclosed in the draft prospectus.

The fund made its first partial exit in August 2022, pulling out Rs 78.2 crore by selling shares to Piramal Finance, TPG and Norwest. It then collected Rs 145.9 crore by offloading some stake to TR Capital in May 2024. It made its third exit move in April this year and pocketed Rs 80 crore, taking its total harvest to almost Rs 304 crore.

Chiratae also invested in Fibe through its maiden growth fund and its flagship fourth and fifth funds in May-June 2024. These three funds put in a total of about Rs 125 crore in the company through primary and secondary transactions.

While Chiratae partially exited in April, TPG, Norwest, TR Capital and Eight Roads bought some shares of Fibe from the company's co-founders. These transactions were stuck at a pre-IPO valuation of about Rs 7,774 crore, per VCCircle estimates.

If Fibe prices its IPO at the same price, it would fetch a valuation of Rs 8,524 crore ($900 million). However, companies generally price their IPOs at a premium to the pre-IPO transactions. This suggests that Fibe could target a valuation of over $1 billion in its IPO.

Meanwhile, the partial exits have helped Chiratae score strong returns on its investment. According to VCCircle estimates based on the first-in, first-out methodology, the VC firm logged a multiple on invested capital (MOIC) of 8x and an internal rate of return (IRR) of around 38% in rupee terms on its partial exit in April.

Its cumulative MOIC on the total returns realised thus far comes to around 6.5x while the overall realised IRR would be around 38%, VCCircle estimates show. That's nearly double the minimum 20% IRR that VC firms typically chase at the fund level in Indian rupees.

Chiratae's third fund currently owns a 4.26% stake in Fibe. This fund now intends to sell a little more than a quarter of its stake via the offer for sale. The growth fund, which owns a 2.19% stake in Fibe, and the fourth and fifth vehicles won't take part in the IPO.

The VC firm's returns would improve further if Fibe prices its IPO at a premium to the April transactions. But even at the same price, the third fund's remaining stake is worth around Rs 331 crore. This takes its total realised and unrealised harvest to around Rs 635 crore, or a tad less than half the third fund's corpus.

Published by HT Digital Content Services with permission from VC Circle.