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SoftBank Invests $275 Million In Lenskart

Japan’s SoftBank has invested $275 million (about Rs 1,645 crore) in Lenskart Solutions through a primary and secondary purchase of shares following months of talks, backing the eyewear solutions company from its second Vision Fund.

SoftBank has invested $231 million in Lenskart through a primary infusion along with making a secondary transaction worth $40-$45 million, which includes buying out part-stakes from three of Lenskart’s existing backers — TPG Group, PremjiInvest and International Finance Corp.

The investment will be its first in India from Vision Fund-II, and the second globally. It is also SVF’s maiden investment in India this year and comes after SoftBank’s once prized portfolio firm WeWork shelved its IPO plan a few months ago, dealing a blow to the Masayoshi Son-led group’s investment thesis.

Lenskart passed a board resolution on December 12 approving the allotment of 22.9 million Series G compulsorily convertible cumulative preference shares to SVF II (Cayman) Lightbulb Ltd, according to a research note published by SoftBank shelled out Rs 714 per share.

The latest capital raising comes about three months after Kedaara Capital, one of India’s largest home-grown private equity firms, invested a shade over $55 million in the company. The PE firm is also in talks to buy shares in the omni-channel eyewear retailer through a secondary deal.

Lenskart has cumulatively raised about $380 million in primary equity financing till date. Separately, its investors have earned over $250 million in secondary transactions, across rounds.

The company plans to use the latest capital to ramp up its manufacturing, supply chain and fulfilment capacities, and utilise the rest to further build technology functions and double its team.

“We have realised that to service the growing demand, and to do that at scale, we need to invest more in manufacturing. If we want to realise our vision of having a 50% market share in India, it will require more backend work in building capability and infrastructure to supply,” Lenskart CEO Peyush Bansal told ET.

Lenskart plans to open a second plant to undertake multi-tiered manufacturing processes, Bansal said. It will also focus on creating smaller, automated and more mobile eye-testing and vision correction equipment, and on artificial intelligence-led technologies.

“Vision correction is a huge problem in India, and about 350 million children don’t have access to quality optometrists. Vision is the biggest health ailment in India, according to the World Economic Forum, and that’s what we are trying to address,” Bansal said.

Vision Fund-II, which is raising money from Apple Inc, Microsoft Corp, Foxconn Technology Group and the sovereign wealth fund of Kazakhstan, made its first close of $2 billion, Bloomberg reported last month. It also participated in a financing round for Chinese online property listing service Beike Zhaofang, it reported.

SVF’s first fund was almost $100 billion in size, but with concerns around the group’s strategy of backing loss-making startups, it may not mop up a similar gargantuan corpus this time round.

The investment in Lenskart was led by Sumer Juneja, partner and head of India at SoftBank Investment Advisors, who joined the world’s largest technology investor in November last year. Avendus Capital acted as advisor for the deal.

It is also the second bet by SoftBank on a vertical ecommerce business with a sizeable offline presence. The world’s largest tech investor had last year invested $150 million into baby products retailer FirstCry, which also runs brick-and-mortar stores.

Lenskart, founded in 2010, has been steadily improving its financials over the last three years, while also expanding in its core home market as well as overseas. It has also entered into a slew of new categories, such as contact lenses.

On a standalone basis, the company reported net loss of Rs 27.89 crore in fiscal year 2018-19, compared to a net loss of about Rs 118 crore in fiscal year 2017-18, documents filed with the Registrar of Companies, and accessed by business intelligence platform Tofler, showed.

Total revenue touched Rs 486.26 crore, as the company expanded across the country and established its footprint in Singapore, its first overseas market.

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