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Sequoia Capital Exits Firstsource Solutions, Royal Orchid

25 June, 2009

WestBridge Capital Partners, the earlier avtar of Sequoia Capital India, has sold a 3.26% stake in BPO services provider Firstsource Solutions Ltd. The stake has been sold for a little more then Rs 34.5 crore on both NSE and BSE in different transactions on Wednesday. The

stake has been sold by Westbridge Ventures I Investment Holdings at a price between Rs 24.8-24.98 a share. WestBridge Capital Partners merged with Sequoia Capital to form Sequoia Capital India in 2006.

Westbridge would still have around a 1.3% stake in the firm. The investment was made from its first fund.

The exit price now is a far cry from the one Sequoia (WestBridge) made when sold around 4.45% stake in Firstsource to Khemka family’s SUN Group for a total sum of $42 million in May 2007. That time Firstsource was trading near its life time high of Rs 88 per share.

Last year there were reports saying that three investors – ICICI Bank, India’s second-largest bank, Singapore state investor Temasek and U.S.-based banking technology group Metavante, who own collectively more than 68% stake in Firstsource – were looking to sell out. Several private equity majors were said to be in the race but the deal did not materialise.

Westbridge had invested $15 million in BPO firm FirstRing in 2001, which was acquired ICICI OneSource in 2003. FirstRing’s other investors were Hero Group, and individual investors, Ravi Sethi and Suhas Patil. ICICI OneSource was renamed as Firstsource later and went public in 2007.

Haircut In Royal Orchid

Another recent exit that Sequoia Capital has made is Royal Orchid Hotels. The Silicon Valley headquartered firm has sold its entire shareholding of 5.96% between May 22 and May 28 this year. The stake has been sold for a total sum of Rs 9.48 crore. Sequoia made an investment

of Rs 25 crore in a pre-IPO deal in Royal Orchid Hotels in 2005, which was known as The Balajee Group of Hotels then.

Sequoia would have earned a sum of Rs 2.75 crore through dividends in since Royal Orchid was listed in 2006, which would take its return on investment to Rs 12.24 crore. But this would still be less than half of its investment amount.

Expanding Listed Portfolio

Earlier this month Sequoia Capital India’s managing director Sumir Chadha told a newspaper that the venture capital firm had invested in seven listed companies between October and February 2009, picking up stake from open markets. The investment have been made from Sequoia’s first growth fund, whose size was $400 million.

It invested $9.3 million in Hyderabad-based Nagarjuna Construction Co. Ltd, and exited the investment at $22.3 million when the markets bounced since May. The other six public markets investments are not known as they have been made using participatory notes.


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Sequoia Capital Exits Firstsource Solutions, Royal Orchid

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