New Delhi, Oct. 30 -- Private equity firm True North, which has made several monetisation moves this year and last while also slashing the target corpus of its seventh flagship fund, has all but written off its investment in a consumer-focused company.

True North, one of the oldest Indian PE firms, has been on the road to raise a new fund since early 2022 and has made partial and full exits from at least seven portfolio companies to attract limited partners. The PE firm has now struck a deal to sell its stake in Sesa Care Pvt Ltd at a fraction of the amount it invested in the ayurvedic hair oil maker.

Mumbai-listed consumer goods maker Dabur India Ltd said Wednesday it will acquire Sesa at an enterprise value of Rs 315-325 crore, including debt of Rs 289 crore. This means Sesa's equity value would be Rs 26-36 crore.

In a two-step transaction, Dabur will first pay Rs 12.59 crore to buy 51% of cumulative redeemable preference shares of Sesa Care from True North. It will then issue its own shares to acquire the remaining preference shares and equity shares of Sesa and merge the company with itself.

The deal comes a year after VCCircle first reported in September 2023 that the PE firm was in talks to rope in new investors for Sesa, which had been struggling to scale up.

True North had acquired a majority stake in Sesa in 2018. The deal valued the hail oil maker around Rs 1,125 crore, including about Rs 325 crore debt. This means True North is taking a deep haircut on its investment.

In fact, True North was to pump in more money in Sesa last year but later decided to scrap the plan and instead go for a larger round with external shareholders, VCCircle previously reported.

The PE firm had valued Sesa around five times its revenue six years ago. Sesa likely recorded sales of over Rs 200 crore at the time of the acquisition. However, the business logged sales of Rs 64 crore in the first six-seven months after the transaction. For the first full year, sales came in at just Rs 89 crore in FY20. Sesa logged sales of around Rs 130 crore in FY23 and Rs 133 crore in FY24, reflecting its inability to scale up.

Meanwhile, Dabur said the proposed merger would provide it an opportunity to expand its presence in the Rs 900-crore ayurvedic hair oil market, a key whitespace in its own hair oil portfolio. Dabur said it can use its distribution network, category expertise, and access to international markets to grow the Sesa brand.

Other exits

True North, known as India Value Fund Advisors until 2017, is currently investing out of its sixth PE fund that raised about $600 million. Since it began operations in 1999, it has launched six funds with a combined corpus of around $3 billion. It has made over five dozen investments and exited nearly two-thirds of those to date.

Last year, the PE firm scored partial or full exits from Fedbank Financial Services (FedFina), Fincare Small Finance Bank, Home First Finance, health insurance company Niva Bupa and KIMS Health. This year, the PE firm has clocked exits from Zydus Wellness and HiCare Services Pvt. Ltd.

While it likely churned out sub-par returns from HiCare and Zydus, it is looking at a blockbuster showcase exit via insurance company Niva Bupa's planned initial public offering. True North also beat benchmark returns in a partial exit from Home First Finance last year.

Meanwhile, True North has significantly slashed the target size of its seventh PE fund, VCCircle reported earlier. The PE firm has been on the road to raise its seventh PE fund for more than three years. It is now eyeing only up to Rs 3,000 crore, or under $360 million, as the final corpus. It was initially looking to raise nearly twice as much.

Published by HT Digital Content Services with permission from VC Circle.