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Friday, January 27, 2023

ADIA looks to invest $400 million in Lenskart at $4.5 billion valuation

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Abu Dhabi Investment Authority (ADIA) is in advanced discussions with Lenskart and its existing stakeholders for an investment of $350-400 million, the largest fundraise by the omni channel eyewear retailer, said people aware of the development. Some of Lenskart’s investors are looking for a partial exit, they said.
The investment will mostly be through a secondary sale of shares with a small primary round consisting of growth equity at a $4.5 billion valuation.

That’s more than double the market capitalisation of Warby Parker Inc., an online retailer of prescription glasses, contact lenses and sunglasses based in New York that was listed on the NYSE last September.

Investors in the 12-year-old Lenskart include Softbank, KKR, PremjiInvest, Kedaara Capital, Temasek, Falcon Edge, Bay Capital and Chiratae Ventures.
So far, the company has raised a total funding of $1.05 billion over 19 rounds as per Tracxn data. It’s not yet finalised which investor will dilute and by how much.
The investment once complete will give ADIA a near 10% stake in Lenskart. A final announcement is expected in a few weeks.

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ADIA and Lenskart declined to comment.
Lenskart expanded its international footprint last year in Singapore, the US and the Middle East and even acquired a
majority stake in Japan’s Owndays in June, creating one of Asia’s biggest online retailers of eyewear.

The acquisition will widen its direct to consumer (D2C) footprint in Southeast Asian markets, including Singapore, Thailand and Taiwan.

The rapid expansion led to a 66% growth in operating revenue in the last fiscal year. However, the growth came at a cost since the company slipped into losses in the fiscal year ended March.

However, it is expected to be profitable in FY23 at a consolidated level and is on track to deliver 50% growth in the India business alone.

The sale of eyewear products has been the main source of income for Lenskart, contributing around 94.3% of
total operating revenue in FY22, as per Registrar of Companies (RoC) filings.

Income from subscription fees grew 14%, revenue from leases, website licence fees, scrap and customer support fees collectively stood at Rs 36 crore in FY22.

Cofounder and CEO Peyush Bansal, 38, initiated the omni-channel strategy at the ecommerce portal and Lenskart has over 1,200 stores in the country and abroad.

According to recent media reports, its most prominent domestic competitor, the Tata Group’s Titan Eyeplus, has 760 stores. In 2021, Lenskart shipped around seven million eyewear pairs.

The company has a manufacturing unit in Haryana and is scaling up with a fully automated facility in Bhiwadi, Rajasthan, to start in a few months. Billed as the largest eyewear plant in the world, it will allow Lenskart to ship up to 50 million pairs every year.

“It’s not a tech company but over time it has adopted an omni-channel approach and has also invested heavily on manufacturing and the basics. That is why it has managed to stave off the tech valuation meltdown to a large extent,” said an investor on condition of anonymity.

“Tech is at the centre but it’s built on that. That’s why, as it scales up more and more, traditional PE or growth equity investors like TPG Growth, which later exited, and now KKR, Temasek find the story appealing… It’s also investing in its private labels and D2C strategy.”

EssilorLuxottica, created through a €50 billion merger in 2017, is the biggest eyewear company in the world with an €80 billion market capitalisation.

After backing core infrastructure and real estate assets, ADIA, which manages close to $800 billion of assets, has become an active investor in startups or emerging companies that have a strong consumer connect and brand pull or are working on cutting edge biotech and frontier technologies, like several of its sovereign wealth fund peers from the Middle East.

Apart from Reliance Jio, Reliance Retail, PharmEasy and Taibang Biologics, ADIA has backed large renewable platforms such as Greenko and Renew.



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