New Delhi, July 8 -- Cult.fit Ltd, a fitness and health lifestyle platform that counts venture capital firms Accel and Chiratae Ventures besides Singapore's Temasek and strategic investors such as Tata Digital among its backers, has taken a deep cut in its valuation ahead of its initial public offering (IPO).
The company, which was previously known as Curefit Healthcare Pvt Ltd, had recorded a surge in its valuation during the go-go years of venture funding in 2021-22 when India was creating unicorns, or a startup with over $1 billion valuation, virtually every fortnight.
During its last significant funding round, in 2021, the company added Tata Digital and Zomato to its cap table. Tata Digital had committed to invest $75 million while Zomato struck a $100-million deal that involved picking up a minority stake in Curefit and selling one of its business units to the fitness company. The Zomato deal pushed Curefit into the unicorn club of startups with a valuation of about $1.5 billion (about Rs 11,500 crore then).
However, in a transaction last month, Chiratae sold Cult.fit shares worth Rs 14.3 crore, according to the fitness chain's draft papers for the IPO. This valued the company around Rs 10,000 crore ($1.05 billion), reflecting a 29% discount to the share price in Cult.fit's Series F extension round in 2024, back-of-the-envelope calculations show.
VCCircle reported about Chiratae's plan to trim its stake in August last year. Chiratae is one of the company's earliest backers and invested nearly ten years ago.
Cult.fit filed its preliminary papers with the Securities and Exchange Board of India (SEBI) on Monday to float its IPO. It is looking to raise Rs 950 crore through a fresh issue of shares, while several of its existing backers are planning to sell up to 17.86 crore shares in the offer-for-sale, according to the prospectus.
The company did not disclose the total size of the issue or the valuation it may target. However, a person familiar with the matter said that the total IPO size could be up to Rs 4,000 crore and that Cult.fit would be aiming for a valuation of up to Rs 15,000 crore, higher than the recent secondary transactions.
This indicates the company would be pushing for the same implied share price at which it last raised money in the last five years, VCCircle estimates show. While the issue of additional shares has pumped up the company's post-money valuation, that has not translated into big returns for late-stage investors who invested at peak valuation and whose investments will likely be at par during the IPO.
Return estimates
At the anticipated issue price, Temasek is likely to be eyeing a return of 2.5x on its blended cost of investment while Chiratae is expected to churn out around 4x. Tata Digital will likely see its value of investment go up around 50-55% while Schroders and Accel are likely to record an upside of 3.6x in the proposed IPO.
Temasek had originally invested in Cult.fit's $110 million Series D funding round, alongside investors like Accel, Epiq Capital, Unilever Ventures, Ascent Capital, the McGovern Family Trust and Julia Dhar of Boston Consulting Group . It doubled down on its investment this year, infusing nearly $50 million more.
Currently, Temasek is the largest shareholder of the company, owning more than a fifth of the company. Through the IPO, the Singapore state firm is looking to divest nearly an eighth of its shareholding.
Meanwhile, Chiratae had first invested in Curefit Healthcare in 2016 as part of the company's $15 million Series A round of funding that also involved Accel and Kalaari. All three of them doubled down on their investment in the following years, participating in funding rounds in 2017, 2018 and 2019.
Accel is the next major shareholder, owning an about 13.45% stake through at least four entities. Chiratae holds at least 5.89%, according to the DRHP.
Both VC firms are planning to cut their stake in the IPO, with Accel selling 6.5 million shares through its fifth India fund and 6.2 million through its fourth India vehicle. It holds a total of 129.1 million shares through four entities.
Chiratae, which has invested through at least five units, is divesting about half of its holding and planning to offload about 28.1 million shares. Kalaari Capital, which holds a 7.8% stake, is selling about 7.4 million shares.
Tata Digital, London-based Schroders Capital, Mumbai-based growth investment firm Epiq capital, VC firm Endiya Partners and Unilever Ventures are also participating in the offer. Unilever, which first came in 2019, will likely see an increase in its investment value.
Several investors have decided to stay put. These include Sixth Sense Ventures, Fireside Ventures, and 360 One.
Meanwhile, Zomato parent Eternal Ltd, which sold FITSO to Cult.fit in December 2021 when the company was valued at $1.56 billion, is also staying put, along with South Park. Zomato, South Park, Fireside Ventures and 360 One, invested only at the peak and are hoping to see the issue price match up to their transaction to keep their investment value above water.
Cult.fit business
Cult.fit has grown into one of India's largest fitness chains, operating hundreds of gyms across over 40 cities. It also offers digital subscriptions, healthy meal delivery and wellness services.
Since inception, it has raised at least $600 million from investors. Apart from the investors named above, its financial backers include Oaktree Capital and family offices Patni Wealth Advisors and Pratithi Investments.
The company's hybrid model, combining physical gyms, group classes and digital offerings, helped it report operating revenue of around Rs 1,720 crore for the fiscal year ended March 2026, up about 41% from the previous year. Subscription-led fitness services remain its biggest revenue driver, accounting for close to 70% of total earnings.
The company still remains unprofitable. It managed to narrow its losses to Rs 252 crore in the last fiscal year from Rs 481 the year before.
Axis Capital, Goldman Sachs (India), Jefferies India and JM Financial are the book-running lead managers to the issue.
Published by HT Digital Content Services with permission from VC Circle.