India: Fertile Ground for GP-leds?

Mar 20, 2018 '

India: Fertile Ground for GP-leds?

Asset and manager quality still pose problems for secondaries buyers in a market where many funds are coming to the end of their lives with large amounts of remaining NAV.

The idea of investing in India, with its burgeoning technology sector, has long been attractive to private equity firms. The country was experiencing an increase in private inflows when the 2008 financial crisis blew the doors open, as investors were compelled to look further afield for returns.

According to data from EMPEA, 100 firms launched private equity vehicles targeting India between 2006 and 2009. In 2008, $8 billion was raised for India-focused private equity funds, a level not seen before or since.

It is clear the country wasn’t ready for this influx. Huge amounts of dry powder were met by unpalatably high valuations. A lack of exit opportunities and the appreciation of the dollar, among other significant challenges, added to the deployment struggle.

“[This] all added up to a comedy of errors, with the end result being that India’s private equity performance did not meet expectations and both GPs and LPs lost money,” wrote EMPEA in its 2016 Private Equity in India report.

A decade later India is a more pronounced version of what has taken place elsewhere: funds coming to the end of their lives with a lot of net asset value and GPs and LPs with different ideas of what should happen next. Consequently, there has been a marked increase in secondaries opportunities, with HarbourVest Partners, NewQuest Capital Partners and TR Capitalamong those lining up to
take advantage.

“A lot of PE managers understand we are the solution to the problem,” said one secondaries manager.

Potential but not there yet

Secondaries buyers encounter three main types of situation in India: crisis-era GPs that raised a fund but were not able to raise another, those who were able to raise a second but not a third, and teams investing in India from global funds looking for a partial or total withdrawal.

The first two sets of circumstances throw up many opportunities for GP-led processes. These GPs are often under pressure to generate returns for their LPs and show that they still have a proposition worth investing in, or they at least want to maintain a stream of fees for as long as they can.

Such deals can be tricky. Often key people have left the fund, weakening the alignment between GPs and LPs and resulting in a lack of vision as to how portfolio companies will achieve exit. This is especially critical in an emerging market, where less developed capital markets can make holding periods longer. Where such transactions do make sense, they tend to be the preserve of Asia specialist secondaries firms.

“Your large global secondaries funds are not likely to be interested in them,” says Amit Gupta, partner and head of India at NewQuest. “They are complex deals. You have to align the team in the right way and ensure that a lot of things fall into place; it’s just not what global secondaries funds want to do.”

The third type of deal, which involves global funds seeking to reduce or eliminate their exposure to India, is most attractive to global secondaries funds, given the established names involved. These nearly always take the form of a direct secondaries sale, such as media company IDG’s 2017 disposal a number of Indian stake as part of a $600-million-plus portfolio sale to a consortium led by HarbourVest.

Warburg Pincus showed last year, with its $1.2 billion sale of a strip of Asian assets, that a direct secondaries sale isn’t the only way to reduce exposure to a market. While no market sources Secondaries Investorspoke to for this piece believed that a deal of similar magnitude was likely in Asia this year, many hoped that as GP-led deals gain traction in India, more global names will choose to stick it out with a fund extension rather than leave the market.

“Many VC funds have taken a call because of lack of liquidity and longer hold cycles [in India] compared to their global cycles,” says one secondaries buyer. “You still have the whole team, the right information, the basic management structure of the portfolio – that’s where I think there will be a lot more [GP-led] deals.”

Awareness of GP-led processes does seem to be growing among GPs. According to Gupta, 80 percent of managers he speaks to know how a GP-led restructuring works, even if they don’t believe it is the right solution for them.

Sabina Sammartino, head of secondaries advisory at Mercury Capital Advisors, which opened a New Delhi office in January to add to its deal origination and project management business, says she expects to see an increase in the number of complex secondaries deals in India over the next 12-18 months.

“Valuations are quite full [in Indian VC] which coupled with still limited realisations should trigger an increasing number of secondaries transactions,” she said. “As we have seen in the US and Europe, as more transactions get done, the level of comfort, the knowledge and understanding will increase.”

Mar 14, 2024

Capitol Meridian Partners Raises $900 Million for First Fund; Hits Hard Cap

Founder-friendly Capitol Meridian Partners invests in companies at the nexus of government and commercial markets Capitol Meridian Partners (CMP), a Washington, DC-based firm that invests in companies at the nexus…

Apr 19, 2023

Gates-backed MetaVC Partners raises $62m for debut fund

MetaVC Partners, which is backed by Bill Gates, has closed on $62 million for its debut fund to invest in start-ups working with new advanced materials. Besides Gates Frontier, Microsoft…

Mar 02, 2023

Mercury hires Glendower exec to lead on secondaries

Mercury Capital Advisors has hired an executive from Glendower Capital as partner to lead its secondaries advisory effort. London-based Devrup Banerjee joined Mercury on 1 February, according to a statement…

Nov 02, 2022

eWTP Arabia spotlights Arab-Asian collaboration at SuperReturn Middle East

Dubai, UAE: eWTP Arabia Capital, a leading Saudi Arabia and China based growth stage venture fund, is co-sponsor of SuperReturn Middle East, the leading private equity event serving the Middle East…

Jul 12, 2022

Mercury adds US secondaries advisory exec

The adviser and placement agent sees a growing opportunity in the US lower middle market, particularly in preferred equity. Mercury Capital Advisors has brought a new hire over from the…

Jul 05, 2022

Springwater Capital partners with Morningside Capital Management and LSV Advisors in a structured solution of a European portfolio of alternative assets.

Springwater, a leading pan-European special situations investment firm, received a preferred equity investment in a portfolio of European private equity assets with a value of over €100 million. Fresh capital raised will…

Feb 17, 2022

Infrastructure Managers Rake in $124B for
New Fundraising Record

Money poured into infrastructure funds at a record pace last year, powered by factors such as a post-pandemic rebound, a range of potential risk and return options and a wide…

Feb 15, 2022

Mercury Capital Advisors Boosts its US Origination and Distribution Capabilities

Mercury Capital Advisors announced today that it has added James Howe and Michael Dunham as Partners to further enhance its origination and distribution capabilities. Howe and Dunham are based out…

Dec 09, 2021

Mercury Capital Advisors Adds Masashi Hirose and Eugene Park to Growing Team

Mercury Capital Advisors announced today that it has added Masashi Hirose as Partner and Eugene Park as Principal to boost distribution and project management efforts for the firm, respectively. Hirose…

Sep 01, 2021

Gaw Capital Partners Takes Top Spot in APAC Fund Manager Ranking by PERE

September 1, 2021, Hong Kong – Gaw Capital Partners ranked first in PERE’s APAC Fund Manager Guide, a ranking based on capital raised over a five-year period, which shows the top 50 fund managers…

Jul 28, 2021

Mercury Capital Advisors Appoints Michael Ricciardi as Chairman Emeritus

Mercury Capital Advisors (“Mercury”), among the world’s elite global private fund placement and advisory firms, today announced that it has appointed Michael Ricciardi, Chief Executive Officer and Co-founder of the…

Jul 21, 2021

Mercury Capital Advisors Announces Four Senior Hires for Distribution Team

Mercury Capital Advisors today announced that it has added four senior professionals to amplify distribution efforts for the firm. Matthew Haimes, based in London, Jill Cohen and Jennifer Tunney, both…

Jul 12, 2021

10 Biggest Trends Shaping the Next 3 Decades, According to Big Investors

Institutional investors and family offices in a recent survey cite digitization, aging population and climate change as the most important trends that will shape the global economic landscape in the…

Jun 15, 2021

Investcorp partners with 17Capital to structure portfolio of alternative assets

17Capital, the global go-to source of strategic financing for investors in private equity, and Investcorp, a leading global provider and manager of alternative investment products, are collaborating to structure a…

Jun 03, 2020

Opportunity-Zone Funds Gaining Momentum

After a slow start, managers of opportunity-zone funds have been raising capital at an accelerated rate, according to Real Estate Alert’s second-annual review of the sector. Twenty-two sponsors working independently…

Apr 22, 2020

Oaktree Leads Rush of New Distressed Funds Seeking $30B

A wave of distressed debt and special situations funds has hit the market in recent weeks in response to the Covid-19 pandemic downturn, jumpstarting a segment that had dwindled to…

Apr 08, 2020

Crisis Sidetracks Fund Shops’ Equity Raises

The coronavirus chaos is taking its toll on fund managers’ capital campaigns. Operators across the country are postponing initial and final closes, or discuss­ing doing so, as investors focus on…

Mar 20, 2020

PE giants eyeing 2 opportunities amidst COVID

We talked to 14 private-equity insiders about how they’re planning to play the coronavirus turmoil. They identified 2 huge opportunities. Market chaos is creating crises and opportunities. Private-equity firms are…

Mar 20, 2020

LPs Slow Pledges to Debt Vehicles

Demand for high-yield-debt funds appears to have softened in the past year. The amount of equity raised by active closed-end vehicles is down for the first time since 2013, according…

Mar 18, 2020

Investors Tap the Brakes on Fund Commitments

After several years of explosive growth, the market for high-yield real estate funds is slowing. The total amount of equity managed in closed-end funds fell for the first time since…


By clicking on this link you will leave the Mercury Capital Advisors, LLC (“Mercury”) website and be taken to a website owned and operated by third parties. These links are provided for your information and convenience only and are not an endorsement by Mercury or the Mercury iFunds™ platform. Mercury has no control over the contents of any linked website and is not responsible for these websites or their content or availability. Mercury therefore makes no warranties or representations, express or implied about such linked websites, the third parties they are owned and operated by, the information contained on them or the suitability or quality of any of their products or services.