The Abu Dhabi Investment Authority (ADIA) and Lenskart, Asia's largest eyewear retailer, have signed a definitive agreement for the Gulf Sovereign Wealth Fund to invest $500 million (SWF). The omni channel eyewear retailer's capital raise, its largest to date, will be primarily through a secondary sale of shares, with a small primary round consisting of growth equity.

The fundraise was completed at a $4.2 billion valuation, and ADIA will become one of Lenskart's largest shareholders with a 10% stake.

Although the parties did not reveal the names of the existing investors who partially exited, it has been reported that some of Lenskart's previous investors, including SoftBank Vision, Kedaara Capital, TR Capital, and Alpha Wave Global, formerly Falcon Edge, have been looking to partially monetise their investment.

The transaction is subject to statutory and regulatory approvals.

Kedaara Capital currently owns about 9% of Lenskart, while SoftBank and Premji Invest own nearly 19% and 10.4%, respectively. SoftBank, which first invested in the company in 2019, is its sole investor.

“Vision care is a nascent stage of evolution even though for ADIA this is a category bet. We have scaled operation, using technology at our core to grow both in India and overseas,” said Peyush Bansal, Founder and CEO of Lenskart. “ADIA are a long term investor, investing out of their balance sheet so they are in no hurry for any liquidity event like an IPO. We would like to leverage their global connects to expand in the region.”

According to Tracxn data, the company has raised a total of $1.05 billion in funding over 19 rounds. Lenskart would have raised $750 million in capital in the last year alone, making it one of the largest such growth stage financings in the world.

Lenskart expanded its international footprint in Singapore, the United States, and the Middle East last year, and in June acquired a majority stake in Japan's Owndays, creating one of Asia's largest online eyewear retailers. The acquisition will expand the company's direct-to-consumer (D2C) footprint in Southeast Asian markets such as Singapore, Thailand, and Taiwan.

Peyush Bansal, the ecommerce portal's cofounder and CEO, initiated the omni-channel strategy. The company now has over 2,000 stores, with 1,500 in India and the rest in Southeast Asia and the Middle East. Its new factory, which will play a key role in producing the 20 million pairs of eyewear that the company plans to ship next year, will also be ready for use soon. According to media reports, Titan Eyeplus, its closest competitor, has fewer than 800 stores.

The company has a manufacturing facility in Haryana and plans to expand with a fully automated facility in Bhiwadi, Rajasthan, that will open in a few months. The world's largest eyewear plant, it will allow Lenskart to ship up to 50 million pairs per year.

The rapid expansion resulted in a 66% increase in operating revenue to Rs 1502 crore in the previous fiscal year. However, the company's growth came at a cost, as it lost Rs 102 crore in the fiscal year ended March, after making a profit of Rs 28 crore the previous year, according to regulatory filings.

However, it is expected to be profitable in FY23 on a consolidated basis and to grow by 50% in the India business alone. According to insiders, the company is currently generating Rs 400 crore in monthly revenue with an EBITDA margin of 7-8%.

According to Registrar of Companies (RoC) filings, the sale of eyewear products has been the primary source of income for Lenskart, accounting for approximately 94.3% of total operating revenue in FY22. In FY22, revenue from subscription fees increased by 14%, while revenue from leases, website licence fees, scrap, and customer support fees totaled Rs 36 crore.

“Lenskart has rapidly established itself as one of the largest and most innovative eyewear companies globally. Given its unique technology-enabled and vertically integrated business model, we believe the company remains well positioned to build on its leadership position,” said Hamad Shahwan Al Dhaheri, Executive Director, Private Equities Department, ADIA. “This investment is a continuation of our strategy of investing in highly differentiated, market leading businesses in Asia linked to the region's consumption-driven growth and rapid technological advancement.”

Financial and legal counsel were provided by Avendus Capital, EY, AZB & Partners, and Allen & Overy. KPMG and PwC served as accounting and tax advisors, respectively, while Rajaram Legal and Khaitan & Co. served as legal counsel to the Company and its shareholders.