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KKR-controlled Avendus buys early-stage tech investor Zodius Capital

09 November, 2017

Avendus Group has acquired technology-focussed early-stage investor Zodius Capital Advisors, as the financial services firm backed by private equity major Kohlberg Kravis Roberts & Co Ltd (KKR) continues to diversify its businesses.

The founding team of Zodius will continue to run two funds that it had previously launched with Avendus and support the portfolio companies till the time it exits these companies, Avendus said in a statement. It didn’t disclose financial details of the transaction.

Mumbai-based Avendus has evolved from a pure-play investment bank to a more diversified company by offering products in niche areas, including alternative asset management, wealth management and structured credit solutions, ever since KKR acquired a 70% stake in the company in November 2015.

The acquisition of Zodius is the second by Avendus Capital Pvt. Ltd, the group flagship, within four months; it had acquired UK-based Ocean Dial Asset Management Ltd in August to fortify its presence in the asset management sector.

Zodius is led by Neeraj Bhargava, Gautam Patel and Shilpa Kulkarni. It has backed companies such as AppsDaily, BigBasket, FreshMenu, PepperFry and Zivame. It manages the $110-million Zodius Technology Fund and the $30-million Zodius Technology Opportunities Fund, which it had launched along with Avendus. It also manages a $20-million independent fund.

Avendus Capital co-founder and CEO Ranu Vohra said the acquisition is in line with the company’s ambition to strengthen its asset management business. “Zodius is an important addition to the franchise,” he said.

The Mint newspaper reported the acquisition earlier today.

Avendus in expansion mode
Avendus also said that it plans to float a $250-million Zodius Growth Capital Fund, which will build on Zodius’ track record and invest in digital, technology and consumer companies. The new fund will be led by Shilpa Kulkarni, a partner in the previous Zodius funds.

In March, VCCircle had reported that Avendus was looking to launch a digital- and technology-focussed fund with a target corpus of $300 million.

“Growth capital in India, specifically in consumer and enterprise technology is an exciting opportunity and we have built an exceptional portfolio in our previous funds,” said Kulkarni.

Avendus, in which private equity investor Gaja Capital and Alliance Tire Group founder Yogesh Mahansaria picked up a stake earlier this month, has launched several alternative investment funds with different strategies in recent months. It has also hired a number of top-level executives over the past year to run its various businesses.

In September, unit Avendus Wealth Management Ltd launched its maiden public markets fund to invest in listed companies. In February, Avendus Capital Public Markets Alternate Strategies LLP launched its maiden hedge fund under Andrew Holland.

Holland, who was previously CEO at Ambit Investment Advisory, had joined Avendus in September last year along with 11 others. The following two months, Avendus hired Dhiren Mehta from KKR to grow its credit business and Sandeep Thapliyal from RBL Bank to head its non-banking financial business. In March this year, Avendus appointed Akash Hariani to lead its multi-family office business.

Zodius funds
Zodius has been investing in the digital, mobile and social media segments since 2011. Its early investments include a bet on marketing firm Whitefield.

In 2014, Avendus—through its alternative asset management unit—had partnered with Zodius to invest $400-500 million in tech companies.

Zodius CEO Bhargava was previously the CEO of business process outsourcing firm WNS Global Services. Bhargava was an entrepreneur-in-residence at Warburg, which held a significant stake in WNS. Before joining WNS, was a managing partner at venture capital firm eVentures India. He has also been a partner at consulting firm McKinsey.

Zodius had raised its $110 million fund in 2015. Last year, it floated a follow-on fund of up to $40 million to invest in e-commerce, fintech and business services startups.

The follow-on fund, Zodius Technology Opportunities Fund, made the first close at $30 million. It raised around $22 million from domestic investors and rest from overseas investors, the company had said last year.

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KKR-controlled Avendus buys early-stage tech investor Zodius Capital

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