WestBridge to step on the pedal for exits

After raising $500 million within a short period of just under six months for its maiden public equities fund, WestBridge Capital, is understood to be stepping on the pedal to reap the benefits of its earlier investments.

Immediately on the block are understood to be a couple of WestBridge’s earliest investments — Applabs and Indecomm Global. These investments were made by WestBridge in its first avataar before being merged into Sequoia Capital in India in 2006. While WestBridge invested around $15 million in multiple rounds in Indecomm Global starting as early as 2003, WestBridge controls about 50 per cent of Applabs, having invested in multiple rounds starting in 2004.

According to investment bankers close to WestBridge Capital, the two exits are expected before the end of 2011 and may fetch as much $150 million for WestBridge, a cumulative return of around six times. When contacted, WestBridge did not respond to queries on these exits. While Indecomm is a technology services provider, Applabs is a software testing services provider.

These exits are understood to be put on the fast-track by WestBridge Capital after the founding partners of WestBridge split from Sequoia earlier this year to set up a new fund which will focus exclusively on taking positions in publicly-held companies.

K P Balaraj, Sandeep Singhal, S K Jain and Sumir Chadha, while exiting Sequoia Capital has said they will continue to be on the board of around 20 companies in which WestBridge / Sequoia combine had invested and will continue to be there until an exit happens. In addition to the two investments, other notable investments which this team of venture capital pioneers in India hold are Coffee Day Group and Vasan Healthcare.

Westbridge, founded in 2000, had raised two funds before merging with Sequoia Capital in May 2006. By the time these four partners exited, Sequoia had assets worth $1.8 billion and has around $600 million left to invest from various India-focused funds.

According to Venture Intelligence, a research service focused on Private Equity and M&A transaction activity in the country, private equity firms obtained exit routes for their investments in 15 Indian companies during Q2 ’11, including one IPO (that of Sequans Communications).

This compares to 25 exits (including four IPOs) in the same period in 2010 and 16 exits (including one IPO) in the immediate previous quarter. Reliance Venture exited France-based 4G chipmaker Sequans Communications via the company’s NYSE listing. Among the exits via M&A, the acquisition of BPO firm Intelenet for $632.5 million by Serco provided Blackstone its first exit for it in India.