ADIA is expected to invest $350 million in Lenskart next week.
Abu Dhabi Investment Authority (ADIA) is set to invest $350 million in Lenskart at a $4.2 billion valuation, ending months of negotiations, said people in the know. The formal announcement is due next week.
That’s more than three times the market capitalisation of Warby Parker Inc., an online retailer of prescription glasses, contact lenses and sunglasses based in New York that was listed on the NYSE last September.
The investment is part of a $450 million capital raise by the omni channel eyewear retailer – its largest till date – and will be mostly be through a secondary sale of shares with a small primary round consisting of growth equity. Some of Lenskart’s investors SoftBank Vision, Kedaara Capital, TR Capital, Alpha Wave Global, formerly Falcon Edge, are looking for a partial exit, the people mentioned above said.
ET in its December 12 edition was the first to report about ADIA in advance discussion for a $400 million raise. On February 23rd, ET also broke the news that Chrys Capital is eyeing a $100 million investment.
So far, the company has raised a total funding of $1.05 billion over 19 rounds as per Tracxn data.
The investment once complete will give ADIA a near 10% stake in Lenskart. Currently Kedaara Capital has an about 9% stake in Lenskart, while SoftBank and Premji Invest own nearly 19% and 10.4%, respectively. SoftBank, which first backed the firm in 2019, is its single largest investor.
Lenskart founder and chief executive Peyush Bansal did not respond. ADIA declined comment.
Gulf sovereign wealth funds are expected to become more active and play an even bigger role in global markets this year as they receive large capital injections derived from higher oil revenue, an annual industry report has revealed. “We are expecting to see an increasing activity and role of Gulf SWFs in the global markets,” said Diego Lopez, founder and managing director of Global SWF. “Middle Eastern SWFs are readier than ever to shine.”
The new phase of dealmaking by the Gulf’s SWFs began with the coronavirus pandemic. From retail and sports franchises to renewable energy and electric vehicles, coffee chains, semiconductor foundries and aircraft leasing companies, the deal making frenzy continues unabated. For example, UAE’s Mubadala invested a record $30bn in 2021.
Last year, it committed to investing £10bn in the UK over five years, and has already deployed about half of it. Its younger sister, ADQ, has been on the acquisition trail across the Middle East, north Africa and Turkey. Even ADIA, Abu Dhabi’s most traditional and conservative SWF, has been investing at a high velocity.
Eye for Growth
Lenskart expanded its international footprint last year in Singapore, the US and the Middle East and even acquired a majority stake in Japan’s Owndays in June, creating one of Asia’s biggest online retailers of eyewear. The acquisition will widen its direct to consumer (D2C) footprint in Southeast Asian markets, including Singapore, Thailand and Taiwan.
The rapid expansion led to a 66% growth in operating revenue in the last fiscal year to Rs 1502 crore. However, the growth came at a cost since the company slipped into Rs 102 crore losses in the fiscal year ended March, after having clocked a profit of Rs 28 crore in the previous financial year, regulatory filings showed.
However, it is expected to be profitable in FY23 at a consolidated level and is on track to deliver 50% growth in the India business alone.
The sale of eyewear products has been the main source of income for Lenskart, contributing around 94.3% of total operating revenue in FY22, as per Registrar of Companies (RoC) filings.
Income from subscription fees grew 14%, revenue from leases, website licence fees, scrap and customer support fees collectively stood at Rs 36 crore in FY22.
Cofounder and CEO Peyush Bansal, 38, initiated the omni-channel strategy at the ecommerce portal and Lenskart has over 1,200 stores in the country. In 2021, Lenskart shipped around seven million eyewear pairs. In comparison, its closest competitor Titan Eyeplus has less than 800 stores, as per media reports.
The company has a manufacturing unit in Haryana and is scaling up with a fully automated facility in Bhiwadi, Rajasthan, to start in a few months. Billed as the largest eyewear plant in the world, it will allow Lenskart to ship up to 50 million pairs every year.