The Walmart-Flipkart $16 billion acquisition must be the biggest fortune that could ever fall on investors in India’s largest e-commerce platform as they are set to receive their biggest payday.
However, the e-commerce platform boasted international investors exclusively and therefore, Indians that will benefit from the $16 billion deal are only Flipkart founders and employees. However, one Indian investor will get around 420% returns on an investment he made 4 years ago in fashion e-commerce platform, Myntra, that was subsequently acquired by Flipkart.
Indeed, the chairman of Wipro Limited and third richest man in India, Azim Premji is going to receive $130 million from his $25 million investment in Myntra thanks to the acquisition of Flipkart by Walmart, according to two people briefed on the subject.
“PremjiInvest had given Myntra a term-sheet at the end of 2013 and invested in it by 2014. They were one of the only players willing to take the risk at that time,” shared one investor close to the Myntra funding discussions. A few weeks after the funding happened, Flipkart acquired Myntra in a stock transaction.
PremjiInvest boasts at least $3 billion worth of assets mostly coming from public markets, therefore making it the biggest family office in India. Experts attribute the success of PremjiInvest to the occurrence and proportions of its investments.
Karan Sharma, co-head of Avendus Capital, commenting about PremjiInvest said, “PremjiInvest is an exception in this entire game. They are looked at as a fund and not a family office as they do large cheques. Their approach has been more early-growth private equity investor than a venture capital investor.”
Additionally, PremjiInvest earned successful returns from investments in retail chains Future Lifestyle Fashion and FabIndia. Additionally, the family office chaired by Azim Premji owns stakes in Lenskart, the online eyewear retailer and Policybazaar, the financial services platform, which is set to receive a valuation of $1 billion as Softbank eyes a deal.
However, as investments come with its lot of risks, PremjiInvest is no exception to the rule.
In 2008, the firm fueled the discount retailer Subhiksha with Rs 230 crore funding but the firm had to shut down barely months after the funding round due to finance mismanagement. The Indian family office also funded Rs 152 in Snapdeal. The deal skyrocketed the company’s valuation to unicorn status and in 2016, the startup was valued at $6.5 billion after backing from Softbank. However, due to mismanagement, the Snapdeal empire crumbled down and even missed out a merger deal with Flipkart in 2017 for only $1 billion.
The success-story of PremjiInvest with Myntra, post Flipkart acquisition, might serve as an example to drive investments in late-stage tech companies as the rewards can be significant.