Foundation PE Expands India Focus Amid Secondary Market Surge
Foundation Private Equity, a pan-Asian secondaries firm, is set to significantly increase its investments in India after deploying approximately 60% of its maiden $120 million fund in the country. This strategic move comes as the secondary market in India gains substantial momentum, driven by rising liquidity needs among private equity and venture capital funds.
Strategic Importance of Indian Market
Jason Sambanju, partner, chief executive and founder of Foundation Private Equity, emphasized India's crucial role in their Asian strategy. "India was our most important market for our Asian strategy, and we did half of the eight deals from our first fund in the country," Sambanju stated. "The region is emerging as one of the most interesting secondary markets out there driven by a conducive regulatory environment and we think there are a lot of the right conditions for this market to really develop."
The firm has been actively expanding its local presence, recently onboarding Dinesh Tiwari as venture partner earlier this month. Alok Gupta, partner and head of India at Foundation, revealed plans for further expansion: "From a team perspective, we currently have three people in India, and we will expand that selectively. The idea is to really catch the early wave of opportunities in the country."
Growing Secondary Market Ecosystem
The increased focus on India coincides with growing activity from both global and domestic players in the country's secondary market. This expansion is primarily driven by funds approaching the end of their life cycles and seeking liquidity to return capital to investors.
According to a Morgan Stanley report from November, private equity and venture fundraising have tripled in the past decade, with investors committing $78 billion to India-focused PE/VC funds since 2020. The report highlighted that India now ranks third globally in the number of venture-backed private unicorns, trailing only the United States and China.
In 2024, India accounted for 20% of all private equity and venture capital investments in Asia, demonstrating the country's growing significance in the regional investment landscape.
Market Developments and Key Players
The secondary market in India has witnessed several significant developments:
- Oister Group and Tribe Capital Management launched a $500 million India-focused secondary fund in 2024
- Piyush Gupta, former managing director of Peak XV Partners, established Kenro Capital to target late-stage secondary deals
- Neo Asset Management has rolled out a secondary strategy
- 360 One Asset Management has raised a ₹5,000 crore secondaries fund
Global players including TR Capital and TPG NewQuest have also been actively participating in India's secondary market, adding to the market's depth and sophistication.
Specialized Investment Approach
Founded in 2017, the Singapore-based, mid-market-focused firm specializes in structuring liquidity solutions at various stages of a fund's life cycle. Foundation typically partners with general partners (GPs) and limited partners (LPs) to execute transactions that meet specific liquidity needs.
The firm's first fund, which had a final close in 2022, has made eight investments across India (four), China (three) and Australia (one). While Foundation is over-indexed in India, it exclusively executes GP-led and LP-led secondary transactions in the country.
"We specialize in this area where we focus on working with GPs to help them identify opportunities to create liquidity and where limited partners can get their returns or maybe even use the capital to re-invest in the GP's next fund," Sambanju explained.
Continuation Funds and Market Evolution
The fund has completed two single-asset continuation funds in India, though specific details remain undisclosed. Continuation funds allow investors to retain successful portfolio companies that require additional time beyond the fund's life cycle to reach their full potential, while providing liquidity to those seeking an exit.
India has begun to see multi-asset continuation vehicles emerge:
- Multiples announced a $430 million continuation vehicle last year to extend investments in Vastu Housing Finance Corp. Ltd, Quantiphi Analytics Solutions Pvt. Ltd and APAC Financial Services Pvt. Ltd
- ChrysCapital announced a $700 million continuation vehicle in 2024 anchored by HarbourVest Partners LLC, LGT Capital Partners Ltd, Pantheon Ventures (UK) LLP and other investors
- Private equity firm Kedaara Capital is reportedly preparing to launch a $300-400 million continuation vehicle
LP-Led Secondary Market Development
Foundation also focuses on LP-led secondaries, where a limited partner sells its position in a fund to another investor. However, this segment remains in its early stages in India.
"This market is still in its nascent stages in India and for it to truly develop, we need scale in terms of the size of the LP position and the willingness of these large entities to sell at market values," Sambanju noted. "This is still evolving in India."
In 2022, the firm acquired all LP interests in the first fund of early-stage venture capital firm Prime Venture Partners, according to online reports. Sambanju added that the bulk of current LPs are traditional public entities that often hesitate to accept discounts typically associated with secondary transactions.
"So, there is an opportunity cost involved here. I think the decision to make such divestments is still evolving in the country," he concluded, highlighting both the challenges and opportunities in India's developing secondary market landscape.
