Venture capital and growth equity investment firm SAIF Partners has won the News Corp VCCircle exit of the year award for its wonderfully-engineered exit from NASDAQ-listed MakeMyTrip Ltd, wherein it pocketed more than 16 times the money it invested in stages, underlining the importance of patience in the space.
SAIF had first invested in the online travel agency in 2005 to buy the stake of an early investor and pumped more money over the next three years. Overall, it held on to its investment in MakeMyTrip for close to a decade, a rarity in the venture capital space.
However, this exit wasn't a one-off example of patience serving SAIF well. In November 2014, it had part-exited its investment in Mumbai-based Just Dial Ltd, generating around 30x in gross returns. It had first invested $11.92 million in the company in 2006, and made follow-on investments in 2007 and 2009, according to data from VCCEdge, the data research arm of News Corp VCCircle.
SAIF's exit is especially remarkable in the light of the fact that profitable VC exits have been few and far between in India, and the majority of rewarding exits have been limited to the private equity (PE) space.
The winner was decided by an eminent panel of judges chaired by Arun Duggal, chairman of ratings agency ICRA.
SAIF sold its remaining 11% stake in MakeMyTrip in the October-December quarter for about $150 million, taking the total amount it generated from the company to around $400 million. In total, it invested $24.23 million in tranches between 2005 and 2008, according to VCCEdge.
The investment firm owned a tad more than half of MakeMyTrip when the company floated its initial public offering (IPO) in 2010. SAIF Partners sold part of its stake in the IPO. It shed more stake during MakeMyTrip's follow-on public offerings in 2011 and 2014. At the end of March 2016, SAIF Partners owned 14.41% in MakeMyTrip.
"The exit of the year was such a fascinating choice. It was wonderful to see that the relationship between SAIF and MakeMyTrip goes back almost a decade. When to get in is important and so is when to get out...as can be seen from the difference between a 3x and 16x valuation. SAIF-MakeMyTrip is an amazing story of patience for a lot of VCs looking at India," said jury member Ireena Vittal, former partner at McKinsey & Co and an expert on Indian agriculture and urban change.