New Delhi, May 25 -- Private equity firm Madison India Capital, which has been on the road to raise its new fund for the past couple of years and signed off from one of its showcase bets last year, has hit the exit button on another portfolio company in India.

The PE firm has sold almost its entire 2.2% stake in fintech venture Pine Labs, encashing around Rs 360 crore ($38 million) via a secondary market transaction.

Madison India Capital, which has been investing in India since 2009, first backed Pine Labs in 2017. It had clocked a partial exit from its investment in 2020 when Lone Pine Capital invested in Pine Labs, according to VCCEdge, the data research arm of VCCircle.

The PE firm, which largely invests in mid-market growth companies operating in sectors such as business services, consumer, financial services, healthcare and technology, had further reduced its stake by about a tenth, selling over 3 million shares in Pine Labs' IPO last year. In the process, it had pulled out Rs 66 crore.

Madison had clocked 5.5x during the initial public offering (IPO), but the stock has lost a third of its value since listing, and at the sale price, the PE firm has churned out 3.6x multiple on invested capital (MOIC).

Overall, the PE firm is believed to have committed over Rs 115 crore. The amount it sold in the partial exit in 2020 could not be ascertained. However, on the rest of the investment, it clocked a MOIC of 3.8x, with an estimated internal rate of return (IRR) of around 17% in rupee terms, as against the 20% benchmark in local currency.

In dollar terms, the returns are pegged at around 12%, a tad short of the 15% benchmark chased by PE firms.

Separately, Madison is eyeing a partial exit from furniture rental startup Rentomojo, which is looking at a public float soon.

This would add to its efforts to show liquidity to new prospective limited partners (LPs) for its latest fund.

Pine Labs, which currently commands a market capitalization of $1.75 billion, counts a bunch of other alternative investors, including Peak XV Partners, Actis, Alpha Wave Global, Temasek and Sofina, on its cap table.

The company focuses on digitizing commerce through digital payments and issuing solutions across India and the world. It operates in India and a number of international markets, including Malaysia, the Philippines, the UAE, Singapore, Australia, the US, and Africa.

The firm recently agreed to acquire Tiger Global-backed Shopflo Technologies, a direct-to-consumer checkout platform, in an all-cash deal valued at Rs 88 crore ($9.3 million).

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