Investcorp wins big from Citykart exit after co gets capital from A91, TPG

Mint

27-05-2025

MUMBAI
:
Bahrain-based private equity firm Investcorp earned more than four times its investment after exiting value retail chain Citykart, which raised about ₹538 crore in its Series B funding round, led by TPG NewQuest and A91 Partners, through a mix of direct investment and share sales, a top executive said.
Investcorp invested ₹75 crore in 2019 in the company's seed round and will now exit with about ₹280-300 crore, Citykart's co-founder Sudhanshu Agarwal told Mint in an interview. 'We undertook this entire process to give an exit to our investors. We are already cash-rich and have a healthy balance sheet, as we have been profitable since inception. While there may be some scope to raise a debt round later, there are no immediate plans to raise any further capital."
TPG NewQuest - a secondary private equity platform for Asia within TPG, and growth-stage investor A91 Partners' entry marks a significant shift in the company's cap table, while existing investor India SME Fund continues to hold a minority stake.
The company did not disclose any details of the valuation.
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As per the terms of the deal, about ₹120 crore constitutes primary capital that will be used to accelerate the company's expansion plans, such as increasing store count and entering new product categories. The company has about 137 stores but plans to add another 40-50 every year.
The remaining portion was reserved for secondary transactions. Typically, shareholders in a secondary transaction sell their stakes to other existing or new investors, and no new capital is injected into the company. Secondary transactions generally take place at a discount to the primary shares.
Increasing stores
'We will be bringing in more stores in the areas where we are present and will also explore other neighbouring states. We've already started opening stores in various places such as Jharkhand, Orissa and Chhattisgarh... we will focus on a combination of fortification (strengthening presence in existing areas) as well as foraying into newer territories," Agarwal said.
Beyond apparel, Citykart is also evaluating newer products like cosmetics. 'We are noticing that cosmetics has become very big in tier 2 and 3 areas. Our focus has always been on identifying product lines that are unorganised and then entering to make them organised and available through our stores," he said. 'So, we feel cosmetics is one field among 4-5 other categories where we feel we can really drive volumes and become more relevant for our customers."
In FY24, Citykart reported an operating income of ₹628 crore, compared to ₹524 crore a year ago. It posted a profit of ₹11.94 crore, compared to ₹24 lakh in FY23, according to a Crisil ratings report in August.
Agarwal further said the company reported revenue of ₹950 crore in FY25 and expects to reach about ₹1,300 crore in the current financial year. Citykart will also tap the public markets to further unlock value for its shareholders, but it aims to at least double its scale before considering a listing, he said.
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He attributed the increase in revenue and improved profitability to better same-store sales growth (SSSG) over the last two years. 'We did some surveys of customers visiting our stores as well as other nearby markets and retailers, and we realised that they are very value-conscious. We understood that increasing the average selling price won't work as they are looking for more offers and promotions," Agarwal said.
Customer feedback
'We made some changes based on these observations, and we saw nearly 70% of our customers come back. Beyond price conscious, it also became clear that it is a volume game as these higher volumes contributed to a bulk of our SSSG," he said. They will continue pricing their products attractively and drive volumes that will target a broader base of customers.
Founded by Agarwal and his brother Rohit Agarwal in 2015, Citykart aims to further strengthen its reach in underserved yet budget-conscious markets. With the bulk of its revenues coming from tier 2 & 3 areas alongside a portfolio of in-house brands such as Athiya, Nimes, Fumee, and Remise, the company caters to over 15 million customers annually.
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Crisil noted that the company's established market presence in tier 2 areas and beyond offers healthy potential for growth. However, it continues to face some headwinds from the fragmented nature of the industry, which results in intense competition from the unorganised market. The company's growth is limited by the number of new stores it can open.