Ginesys $10m fundraise from ex-Bain Nikhil Raghavan’s Marathon Edge
Marathon Edge, the private equity fund set up by former Bain Capital principal Nikhil Raghavan, has agreed to invest up to $10 million (Rs 69.45 crore) in retail software platform Ginesys.
Kochhar & Co advised Ginni Systems Limited, operating as Ginesys, led by a team consisting of Partner Sarika Raichur and Associate Shivika Upadhyay.
Interview with Sarika Raichur, Partner, Kochhar & Co.
What due diligence must be done in such an investment?
Hitherto, Ginesys was largely relying on its revenues to sustain and expand. A company which hasn’t undertaken conventional rounds of equity funding up until the growth stage, especially in the Indian context, must review its own position in terms of compliance and identify potential liabilities for the investor, company, as well as management. Due diligence was considered essential to enable the company to wade through the negotiations effectively. This was also important from the perspective of mitigation of potential liabilities. In transactions such as these, involving business surrounding the sale of Point-of-Sales (POS) and Enterprise Resource Planning (ERP) software and services, typical issues are around ownership of intellectual property rights and customer contracts, besides the regular labour and employment and corporate compliance matters. We assisted Ginesys with exactly this.
What challenges arose when working with Ginesys?
A company, which hasn’t been through the conventional rounds of equity funding up until its growth stage, requires deep engagement with its legal counsel at all stages of the transaction, perhaps, as much as an entrepreneur embarking on a new journey on their venture. Naturally, Ginesys required to conduct a thorough analysis of the legal documentation and its implications for the company and its management. As a result, negotiations were intense.
This investment is expected to enable Ginesys to invest in technology, organisation building and make strategic acquisitions. On the verge of becoming a PE-backed growth-stage business, Ginesys needed to use this opportunity to restructure its organisation.
How did you navigate these issues?
Given the unique nature of the transaction involving a quasi-strategic investment by a private equity fund at such an advanced stage in the company’s journey, it was extremely crucial for Ginesys, their management and their advisers, to be on the same page prior to negotiations. We made sure the management and advisers huddled on all key issues arising out of the legal documentation and the diligence in order to have clarity during negotiations.
Aside from the above, we comprehensively advised Ginesys on structuring its organisation and corporate governance matters, in order to be fully aligned on the transaction with the investor as well as meet best practices.