Summary:
Secondary investors in India are increasingly buying holdings in private equity fund assets to gain access to a transaction pipeline worth around US$ 20 billion. TR Capital's CEO, Mr. Paul Robine, highlights this rise in demand. Managers intend to liquidate over US$ 92 billion in unrealized wealth from firms they financed over six years ago. Despite an improved exit climate, selling remains time-consuming, especially for venture capital funds focusing on fast-growing businesses.
Investors are increasingly purchasing existing assets or commitments from primary investors or private equity firms in secondary transactions. A substantial component consists of continuation funds, which enable assets to be transferred to different vehicles for extended retention. Secondary funds are aggressively seeking agreements with firms likely to go public in the next 18 to 24 months, as well as venture capital portfolios. These deals could generate up to US$ 20 billion annually. The success of ChrysCapital's continuation fund, which raised US$ 700 million to maintain its ownership in the National Stock Exchange of India Ltd., has piqued the interest of other firms. Furthermore, venture capital funds are seeking exits to return cash to investors. Unlike in the United States and Europe, India's secondary offerings focus on minority stakes, with discounts ranging from 20% to 25% off net asset values, attracting more foreign managers to the market for the first time.
Source: IBEF
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