NR Narayana Murthy's firm may buy stake in Udaan | Economic Times

Mumbai: Catamaran Ventures, the private investment firm launched by Infosys’ co-founder NR Narayana Murthy, is in talks to purchase a small minority stake in Udaan from some employees of the business-to-business marketplace.These employees are seeking to offload their vested stock options, according to three people with direct knowledge of the negotiations.The Bengaluru-based family office could acquire 2-3 % stake in Udaan, which was last valued at $3.2 billion when it raised $280 million from new and existing investors as an extension of its Series D funding round in January, the sources said.“This is a completely secondary transaction. Some employees might sell part stake to bring on board Catamaran,” said one of the persons cited above, adding that "currently, due diligence is being carried out”.Udaan has so far raised $1.15 billion from a clutch of investors, including Octahedron Capital, Moonstone Capital, Lightspeed Venture Partners, partners of DST Global, GGV Capital, Altimeter Capital Hillhouse Capital, Footpath Ventures, Citi Ventures and Tencent.As of January, Udaan had more than three million retailers and small and medium-sized businesses transacting on its platform. It competes with companies such as IndiaMart, Amazon Business, JioMart and Flipkart for a slice of India’s growing B2B e-commerce space.For Murthy’s investment firm, this deal comes almost two years after it increased its holding to 76% in Cloudtail, a joint venture with Amazon. Cloudtail is the biggest seller on Amazon India’s online retail marketplace. A stake purchase in Udaan will provide Catamaran with an entry into the fast-growing B2B e-commerce space as well.Responding to emailed queries on the potential stake sale, a representative for Udaan said, “As a responsible organisation, we do not comment on market rumours or premature transactions.” MD Ranganath, president of Catamaran Ventures, did not respond to multiple phone calls and text messages seeking comment.Founded in 2016 by three former Flipkart executives Vaibhav Gupta, Amod Malviya and Sujeet Kumar, Udaan helps retailers purchase goods from wholesalers and traders across categories such as apparel, electronics, pharmacy, staples, fresh food and fast-moving consumer goods. It has connected about three million retailers across 900 cities with some 25,000 sellers spread across 200 cities. The company offers supply chain, lending, payments and marketing capabilities, enabling these retailers to source from large manufacturers as well as distributors.According to a report from Bank of America, the unaddressed SME credit demand in India is around $300-$350 billion, with more than 90% of current demand being met by banks. A typical digital SME lender focusses on Rs 1-5 million ($13,575 to $67,875) ticket size with no collateral, average tenure of around 12-18 months, and with some ecosystem anchor,” the report stated. In January, when it raised fresh capital, Udaan had said it would deploy the funds to also expand its financing capabilities for small businesses and extend its supply chain network.On its part, Catamaran has till date invested in a range of businesses including the National Stock Exchange, edtech portal Udemy, insurance seller Acko, Paperboat maker Hector Beverages, Manipal Global and Ace Creative Learning, among others. According to the fund’s website, it manages over $1 billion across asset classes.