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https://www.vccircle.com/sixth-sense-ventures-invests-jhs-svendgaard/

Consumer-centric venture fund Sixth Sense Ventures said on Monday it has invested in oral care products company JHS Svendgaard Laboratories Pvt Ltd.

The transaction involves an investment of Rs 3.3 crore ($0.5 million) for a stake of around 11 per cent that would get diluted by half as the firm has simultaneously decided to issue convertible warrants to its promoter and others to raise Rs 24.5 crore.

The company is issuing new shares and warrants at Rs 11 apiece. This means the investors would be sitting on unrealised gains of two times their principal at the time of investment given that shares of JHS Svendgaard closed at Rs 25.1 each on Monday. The shares jumped 4.8 per cent in a weak Mumbai market to hit the upper limit for the day and have doubled in the past month.

JHS is a contract manufacturer for brands such as Dabur, Patanjali and Amway. It has also launched its own oral care portfolio under the brand Aquawhite.

The Delhi-based company started as a small-scale enterprise in 1997 as Sunehari Svendgaard. Seven years later it was incorporated as JHS Svendgaard Laboratories and made its debut on the bourses in 2006.

It has two production facilities at Noida, which is an export-oriented unit, and Kala Amb area in Himachal Pradesh.

“Apart from servicing the contract manufacturing needs of some of the top brands in India, JHS would also be working to creating a strong niche brand of JHS in oral care category,” said Nikhil Nanda, founder and CEO of JHS Svendgaard.

“We believe that there are ‘white spaces’ within the category which a challenger is better suited to address. We believe that there is a huge pent up demand for a disrupter in the category and our belief is that given its operational capabilities and a meaningful understanding of the consumer behaviour, future product launches under Aquawhite will open up the space for JHS,” said Nikhil Vora, founder and CEO of Sixth Sense Ventures.

Interestingly, Vora himself is a small investor in JHS Svendgaard. In fact, last year he had joined some other proposed investors to put in fresh money into the company as a personal investment. However, that deal was delayed and eventually scrapped.

The firm last week proposed to raise cash afresh through a preferential allotment of warrants to the promoter and others including Mohit Burman and others.

Vora said Sixth Sense Ventures will also get a board seat that it may opt for at a later date.

This is the fifth portfolio firm for Sixth Sense Ventures after its debut deal where it backed luxury watch retailer Ethos. In January last year, it put money in Cross Roads India Assistance Pvt Ltd, a road side assistance provider for cars and two wheelers.

In August, it joined several others to co-invest in media group NDTV’s e-commerce venture Gadgets 360 degree. In November, it backed Grab, a Mumbai-based hyperlocal logistics service provider.

Sixth Sense Ventures is not the first institutional investor to bet on JHS. Five years ago, Tano Capital had picked up just under 15 per cent of the firm for around Rs 25 crore. Its stake is now worth Rs 8.75 crore.

For the year ended March 31, 2015, JHS Svendgaard reported a net loss of Rs 22.17 crore on revenue of Rs 55 crore.