In a rare consumer sector bet, Warburg Pincus has invested nearly $100 million in Imagine Marketing Pvt Ltd, the Mumbai based startup that makes consumer electronics under the boAt brand. The five-year old startup will use the capital raised to widen research and development (R&D) and grow the product portfolio.
VCCircle was the first to report last month that the New York headquartered buyout firm had emerged as the frontrunner to invest in boAt.
Mumbai-based Avendus Capital acted as the exclusive financial advisor to boAt on the transaction.
"Going forward, with the government’s support, we will focus on building capabilities in domestic R&D and undertake vertical integration across both the hearable and wearable space to establish India as a global supplier," boAt co-founder Sameer Mehta said in a statement.
boAt was founded in 2016 by Mehta and Aman Gupta. The startup’s product catalogue includes headphones, earphones, wearables, speakers, and related accessories such as chargers and cables. It claims, citing International Data Corporation (IDC), a 20% share in India’s earwear segment.
“We see a compelling growth story in boAt and believe the company is well-poised to build upon the strong leadership position it has carved out within the industry and stands to benefit from the secular tailwinds of e-commerce growth in India," Warburg Pincus India managing director Vishal Mahadevia said.
The startup claims to have generated at least Rs 500 crore in gross revenues for the financial year 2019-20. It reported net sales at Rs 239.44 crore for the financial year ended March 2019 and a profit after tax of Rs 8.73 crore, according to VCCEdge.
The firm had received a commitment of Rs 20 crore in venture debt from the investment arm of Flipkart co-founder Sachin Bansal last year, according to media reports at the time. In May 2018, boAt had raised Rs 6 crore from Bengaluru based early stage venture firm Fireside Ventures.
boAt competes with players such as PTron, Boult, Mivi and Noise among its Indian counterparts. However, foreign players such as Sony, Skullcandy, JBL, Xiaomi have a dominant presence in the audio accessories market in the country.
The private equity firm has largely been an investor in sectors such as finance, technology, logistics, infrastructure and hospitality. A few of its consumer sector investments include jewellery chain Kalyan and apparel label BIBA, besides consumer facing media distribution and exhibition firms PVR and Airtel DTH.
In October, Warburg Pincus said it would invest Rs 700 crore ($95.38 million) in Home First Finance Company India Ltd, as the private equity firm continues to bet big on India’s financial services sector. Early this year, the firm also picked a stake in Apollo Tyres.
Last year, Warburg also reinvested in existing portfolio firms PVR and CarTrade among others.
Meanwhile some of Warburg's Indian portfolio firms are preparing for public market outings. These include Kalyan Jewellers India Ltd and Capillary Technologies. Another portfolio firm, CAMS, recently went public.