Block deals in listed startups touch nearly Rs 27,000 crore in August as VCs cash out

Block deals in listed startups touch nearly Rs 27,000 crore in August as VCs cash out

Venture capital funds, early investors and other large shareholders stepped up stake sales in listed new-age companies in August, with a series of large secondary transactions moving shares worth almost Rs 27,000 crore into the hands of public-market investors.

The activity was concentrated in a handful of companies. Lenskart, Paytm and Groww together accounted for about Rs 16,400 crore, three-fifths of the total value tracked by Moneycontrol. Eternal and Meesho were the other major contributors.

The selling was led by a mix of VC and growth investors, strategic shareholders and early backers.

Mutual funds, insurers, pension funds and global institutional investors absorbed much of the supply, highlighting the growing demand for new-age companies.

Lenskart, Paytm and Groww lead

Lenskart saw the highest transaction value in August, with three tranches of large share sales adding up to about Rs 7,445 crore.

SoftBank Vision Fund II sold shares worth Rs 2,888 crore on August 24, reducing its holding from 9.86 percent to about 7.28 percent.

Alpha Wave-linked entities sold another Rs 1,857 crore on August 28. On August 31, institutional investors, including BNP Paribas Financial Markets, Societe Generale and Integrated Core Strategies, were involved in a transaction worth about Rs 2,700 crore.

Paytm was next, with shares worth Rs 4,987 crore changing hands in two deals. On August 4, entities backed by Elevation Capital and SAIF sold shares worth Rs 2,038 crore. On August 18, Resilient Asset Management, the investment vehicle linked to founder Vijay Shekhar Sharma, sold shares worth about Rs 2,949 crore.

Groww accounted for roughly Rs 4,000 crore. About Rs 1,500 crore worth of shares were traded on August 18, followed by a Rs 2,500-crore transaction on August 26. Ribbit Capital was reported to be the likely seller on August 26.

Eternal, Meesho add to the supply

Eternal saw about Rs 3,265 crore of shares sold on August 31. BNP Paribas Financial Markets sold roughly Rs 1,671 crore worth of shares, while Integrated Core Strategies, an affiliate of Millennium Management, sold another Rs 1,594 crore.

Meesho saw two big deals during the month, totalling about Rs 2,919 crore. On August 4, Elevation Capital and Peak XV Partners each sold shares worth about Rs 975 crore, taking the total transaction to Rs 1,949 crore.

On August 24, Y Combinator-linked entities sold another Rs 970 crore worth of shares.

The remaining transactions were spread across Ather Energy, Amagi Media Labs, PhysicsWallah, Urban Company, Aye Finance, WeWork India Management, Shadowfax Technologies and Capillary Technologies.

At Ather, the government of Singapore sold shares worth about Rs 1,758 crore, with Hero MotoCorp emerging as the buyer and raising stake in the electric two-wheeler maker.

The August activity reflects how listed shares are increasingly becoming a source of liquidity for VC and growth investors.

SoftBank, Alpha Wave, Elevation Capital, Peak XV Partners, Lightspeed, Accel, and entities associated with Y Combinator were among the prominent investors selling shares during the month.

These transactions do not necessarily represent complete exits. For many funds, block deals offer a way to return capital to limited partners while retaining some exposure to a company.

The August activity also comes against a much larger pool of shares that became eligible for trading following the expiry of pre-listing lock-ins.

A Moneycontrol analysis in May estimated that nearly Rs 2.3 lakh crore worth of shares across 11 newly listed new-age companies would become eligible for trading between May and August as lock-ins expired.

The August transactions suggest that this supply is beginning to move through the market, with institutional investors providing an important counterweight.

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