On Monday morning, Sequoia Capital, a venture capitalist firm, may carry out a block deal to sell all of their 10.18% ownership in the holding company of Indian fashion label Go Colors.
On Monday, there could potentially be heavy trading action in Go Fashion following reports that venture capital firm, Sequoia Capital, is set to sell its entire 10.18% stake in the parent organization of Indian clothing brand, Go Colors, in a block deal. Sequoia Capital had previously held a 13.8% stake in Go Fashion. In December 2021, Sequoia Capital embarked on a block deal to sell a 3.7% stake for INR 2.28 billion ($31.2 million). For the latest stake sale, the floor price has been set at INR 1,135 per share – constituting a 5% discount to the closing price of INR 1,194 on Friday. The total size of the block deal will be INR 6.25 billion ($85.8 million), according to reports from CNBC TV18. JM Financial is the sole broker for the deal.
Sequoia Capital’s decision follows its recent announcement to separate its businesses in China, India, and Southeast Asia operations into two independent ventures to be run without the involvement of the parent firm. The report highlights that Go Fashion saw a 20% YoY increase in net profit for the March quarter, rising to INR 150 million ($2.1 million), compared to INR 120 ($1.7 million) a year before. The company’s total income for the quarter rose 34% YoY to INR 1.6 billion ($22 million) compared to INR 1.19 billion ($16.3 million) in the same period last year.
Last year, Sequoia Capital had amassed $2.8 billion to financially support startups in India and Southeast Asia. However, latest reports indicate that most of the $2.5 billion left in reserves will be utilized by Peak XV – the largest venture capital company in India – led by former managing directors from Sequoia Capital in the region. Sequoia’s China business will be named Hongshan, with India and Southeast Asia being renamed Peak XV, which will manage more than 400 portfolio companies and assets worth $9.2 billion.
Overall, the proposed sale of Sequoia Capital’s Go Fashion stake is likely to generate a lot of trading activity on Monday. The move comes at a time when the trend in India’s economy is unclear, and foreign investment continues to face regulatory issues. This development has also added to some concerns about whether foreign investors continue to remain bullish about India’s market, given the rising trend of exits by global investors in domestic firms.
However, industry experts still believe there is a lot of untapped potential in India’s economy and that foreign investment will continue to play a crucial role in the country’s growth story.
