Sequoia Capital Siphoned About $230M Via Unfair Exit From Pine Labs

Sequoia Capital has reportedly pocked around $230 million money owned by Pine Labs through a business to business (B2B) space.

Pine Labs, which has shown to be the best bet for the American venture capital firm. This is established by Sequoia’s back to back partial exits from the company worth over $455 million in the past few years.

According to entrackr.com, the latest deal, Sequoia has offloaded 92,023 ordinaries and 512,232 preference shares in Pine Labs to seven investors in a secondary transaction during July 2021, according to the company’s regulatory filings in Singapore.

According to Fintrackr’s estimate, the shares transferred by Sequoia Capital to the new investors are valued at between $225-$230 million. This is the third time when Sequoia has offloaded its holding in Pine Labs in the past year and a half.

In May 2020, Sequoia had pocketed $26 million when Mastercard led a $300 million Series H round in the Delhi-based firm. Apart from the VC firm, several other stakeholders including founding members and senior employees of Pine Labs had also diluted their holdings in the 23-year-old company.

A year later (in May 2021), the VC firm had sold out $45 million worth of shares to Marshall Wace, Duro Capital, Moore Strategic Ventures and Lenarco Limited.

Sequoia Capital Siphoned About $230M Via Unfair Exit From Pine Labs

Entrackr had exclusively unpacked (here and here) the Sequoia and other shareholders’ partial exit from Pine Labs on both occasions.

In the latest secondary sale, Sequoia has transferred shares worth $87.9 million to Raffles whereas DBS Bank bought out a stake worth $67.4 million from the venture capital firm. Treeline Asia Master Fund and Neuberger Berman have also acquired shares worth $50 million and $10 million respectively in this secondary transaction

Further, Blackrock and Ishana Capital have picked up Sequoia’s shares in Pine Labs worth $3.8 and $4.22 million each while CitiBank has picked up stock worth $2 million. In a separate transaction, Octahedron Capital has acquired shares worth $500K from Pine Labs’ founder and chairman Lokvir Kapoor, as per Fintrackr estimate. Previously, he had sold a share of his holdings to Madison India and Actis.

Detailed queries sent to Pine Labs and Sequoia on Sunday didn’t elicit any response until the publication of this story. We will update the story in case they respond.

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A couple of investors who have bought shares from Sequoia also invested primary capital in the company along with others. Global alternative investment firm Marshal Wallace has poured in $20 million for freshly issued shares while Blackrock invested $14.21 million for primary capital in Pine Labs, separate regulatory filing shows.

After the secondary transaction, Sequoia remains the largest stakeholder in the company, still controlling around 25.7% stake as per Fintrackr’s estimates while Kapoor is the biggest non-institutional shareholder with a 5.05% stake. According to media reports, Pine Labs was valued at $3.5 billion in its last funding tranche.

For Sequoia Capital, Pine Labs has turned out to be one of the stellar bets in the Indian startup ecosystem. It already had pocketed close to $300 million via several partial exit events and it’s likely to make $1 billion-plus overall from the company. The company is reportedly planning for a public listing in NASDAQ in the next 18 months.

Sequoia’s last investment in Pine Labs was made in December 2015 when it invested $3 million. The VC firm’s total investment in the company couldn’t be ascertained as a statute of limitation had passed on records of prior investment information.