Secondary sales find fervour with PE players
Agencies
Posted: Apr 07, 2009 at 1400 hrs IST
Global economic downturn has given rise to a new trend in the private equity scene, secondaries,
wherein partners in a PE fund are preferring to liquidate their position to another party to meet
redemption pressures.
\"Going forward we will see more secondary deals in the Indian private equity space. Now more
such deals are coming to the fore as increased number of partners are looking at liquidating their
position to meet prior commitments,\" Venture Intelligence CEO Arun Natarajan said.
Known as 'Secondary deals' in Private Equity parlance, 'secondaries' refer to a Limited Partner
(LP) or the part owner of the fund selling its stake in the fund to another partner or a third party
to seek an exit option.
Echoing similar view KPMG PE Advisory Group Head Vikram Uttamsingh said: \"PE industry
will see a lot less deals in 2009. Secondary sales will increase as some PE firms and LPs will feel
global pressure to exit their India investment\".
Analysts believe that with the fall in PE valuations, the partners are now exiting the funds at
much cheaper prices.
\"Some limited partners are now exiting even at lower valuations as they are on the verge of
bankruptcy. They are resorting to desperate sale as they are facing trouble back home,\" SMC
Capitals Equity Head Jagannadham Thunuguntla said.
As per Venture Intelligence, in 2008, there were seven secondaries in India, including ICICI
Venture's stake sale in Subhiksha to Premji Invest for USD 56 million.