Investment deal pipeline attracts funds (Photo: Bloomberg)
3 min read Last updated: October 7, 2024 | 8:58 AM IST
Preeti Singh
In India, secondary investors are gaining momentum, buying up stakes in assets held by private equity funds, seeking a piece of a deal pipeline worth up to $20 billion.
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Paul Robin, founder and chief executive officer of TR Capital, an Asia-focused secondary buyer, said demand for these types of deals has increased in recent months. He said the deal comes as executives are trying to sell off nearly $92 billion in unrealized transaction value from companies they backed more than six years ago.
Referring to venture capital funds that invest in innovative, fast-growing companies in India, he said selling these companies “will take time, even if the exit environment improves significantly.” In a secondary transaction, an investor purchases existing assets or commitments from a primary investor or the private equity fund itself. A growing segment of the market includes continuation funds, in which assets are transferred to another vehicle, allowing the fund or general partner to hold the assets for a longer period of time.
Secondary funds can range from companies ready to go public within the next 18 to 24 months, to the sale of a portfolio of assets by a venture capital fund, to some continuing capital raised by a private equity manager. Seeking a deal. Those deals could be worth as much as $20 billion a year, according to secondary buyers and advisors.
The success of Kreis Capital Management’s Continuation Fund, which raised $700 million to hold a stake in the National Stock Exchange of India earlier this year, has led to other private companies・There is reportedly increasing interest from equity companies. Raymond James Financial’s Private Capital Advisory Group
“We believe that in the next 12 months alone, we will see at least three to four continuing funds launched in India,” Sinha said.
Meanwhile, venture capital funds that have been stuck in an environment where growth assets are slow to close deals are likely to turn to investors before fundraising gets back on track, according to Sameer Nath, chief investment officer and head of venture capital. The company is reportedly looking for a way out so it can return the funds. Private equity capital of 360 One WAM Ltd., one of India’s largest asset management companies.
Brooke Chow, partner at LGT Capital Partners, said that unlike in the U.S., Europe and some parts of Asia, where secondary stakes are primarily buyouts, deals in India involve assets in which managers hold a minority stake. is said to be the target. LGT Capital, which invests 20% to 25% of its global capital in Asia, is also considering more deals in India, where its pipeline is expanding, Zhou added.
Most of the deals are at discounts of 20% to 25% of net asset value, making them attractive to secondary buyers, said Amit Gupta, founding partner at TPG Newquest. TPG Newquest plans to deploy up to 50% of its latest secondary fund in India, Mr. Gupta said.
More global executives are also looking to do business in India, some for the first time, Mr. Gupta said.
Kunal Sood, managing director with responsibility for primary, secondary and commercial in Pantheon’s Asia investment team, said: “There are concerns that general partners bringing in secondary investors will disrupt their existing investor base. “This is a sign that the Indian market is maturing.” – Investment opportunities in Asia Pacific.
First publication date: October 7, 2024 | 8:58 AM IST
