Cloudtail, a joint venture between Catamaran and Amazon India, was established in 2014 with the goal of training and onboarding merchants for Amazon's e-commerce platform.
Catamaran, the investment arm of Infosys co-founder Narayana Murthy and his wife Sudha Murthy, recently made headlines for selling their 76% stake in Cloudtail for Rs 1,332 crore ($160 million). This marked a significant exit from a company they initially invested in for Rs 417 crore ($50 million) approximately eight years ago. The sale resulted in a substantial profit of Rs 915 crore (about $110 million), representing a significant return on investment (ROI) of 3x. This substantial gain was due to the growth and success of Cloudtail.
Cloudtail, a joint venture between Catamaran and Amazon India, was established in 2014 with the goal of training and onboarding merchants for Amazon's e-commerce platform. Over time, it grew to become Amazon's largest merchant. However, changes in e-commerce regulations, which restrict marketplaces from having direct stakes in their merchants, led to Amazon reducing its shareholding from 49% to 24%. This, in turn, created an opportunity for Catamaran to increase its stake in Cloudtail.
Cloudtail's profitability from FY19 to FY21 allowed it to secure a loan of Rs 1,750 crore ($211 million) from HSBC in FY22. Despite its success, Cloudtail faced challenges, and in 2021, it was announced that it would cease operations as a merchant starting in 2022. This change in direction led to a decline in Cloudtail's sales from over Rs 19,000 crore ($2.3 billion) in March 2022 to Rs 3,100 crore ($370 million) by March 2023.
Aside from Cloudtail, Catamaran has made investments in several other startups over the past decade, including Paper Boat, Acko, Udaan, Dailyhunt, Reddit, Elon Musk’s SpaceX, deep-tech energy startup Log 9, and B2B e-commerce firm Udaan. These investments are typically characterised by Catamaran's preference for small, minority stakes, usually less than 5-10%.
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