New Delhi, Aug. 7 -- TPG NewQuest, the secondaries investment arm of US-based private equity firm TPG, has logged spectacular returns by selling a slice of its holding in an Indian company that joined its portfolio two-and-a-half years ago.

The firm, which was founded as NewQuest Capital Partners in 2011 and became a TPG-owned entity in 2022, sold a 2.1% stake in Shadowfax Technologies Ltd for about Rs 300.6 crore ($31.5 million).

The PE firm first backed Shadowfax in early 2024 through a combination of primary and secondary transactions. It put in more money the following year, taking its total investment to Rs 402 crore.

The latest liquidity move is the second partial exit by the PE firm from Shadowfax. In January, it sold a small chunk of its stake in Shadowfax through the company's Rs 1,907-crore initial public offering (IPO) and mopped up Rs 45 crore. This helped the PE firm to generate an internal rate of return (IRR) of more than 60% and a multiple of invested capital of about 2x, VCCircle reported at the time.

Shadowfax's shares have almost doubled since then, crossing Rs 240 apiece from the IPO price of Rs 124 apiece and pushing its market capitalisation to more than Rs 14,000 crore.

This surge has helped TPG NewQuest to improve its returns. The latest transaction delivered an IRR of 88% and a 4.6x multiple of invested capital in rupee terms, according to VCCircle estimates on a first-in, first-out (FIFO) basis. In dollar terms, which is more relevant for the PE firm, the IRR is estimated to be around 78% because of the rupee's 11-12% depreciation against the greenback since its investment.

This is more than four times the minimum 20% IRR that PE firms typically target at the fund level in local currency and five times the 15% benchmark in dollars.

Including its previous stake sale at the time of the IPO, TPG NewQuest has now realised an overall 83% IRR and a 4.1x MOIC on its investment in Shadowfax in rupee terms, VCCircle estimates show.

TPG NewQuest continues to own around 9.4% of Shadowfax. This is valued at approximately Rs 1,321 crore at the current market price.

The PE firm joins venture capital firm Eight Roads Ventures and Walmart-owned ecommerce giant Flipkart in monetising its investment in Shadowfax.

Eight Roads sold a major chunk of its stake in Shadowfax last month for Rs 964.4 crore (about $100 million), generating strong returns on its investment, VCCircle reported at the time. This takes its total harvest from Shadowfax to nearly Rs 1,450 crore, or around $155 million.

Flipkart offloaded shares worth Rs 690 crore last month. Combined with its harvest of Rs 400 crore at the time of IPO, Flipkart has pulled out Rs 1,090 crore from Shadowfax.

Shadowfax's other investors include Qualcomm, South Korean asset manager Mirae Asset, Nokia Growth Partners, and International Finance Corporation.

Founded in 2015 by Abhishek Bansal, Vaibhav Khandelwal and Gaurav Jaithliya, Shadowfax operates one of India's largest technology-led logistics platforms, providing third-party logistics and last-mile delivery services to e-commerce, quick commerce and direct-to-consumer brands. Its customers include Flipkart, Zepto, Zomato, Myntra, Blinkit, Swiggy, Apollo Pharmacy, BigBasket and Decathlon.

The company has continued to scale rapidly after listing. In FY26, its operating revenue jumped nearly 69% to Rs 4,202 crore from Rs 2,485 crore the year before, while adjusted EBITDA rose to Rs 159 crore. It reported a net profit of Rs 112 crore for the year and has maintained 12 consecutive quarters of EBITDA profitability.

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