Foundation Private Equity, a Singapore-based secondary specialist, has acquired all limited partner (LP) interests in the first fund from early-stage venture capital firm Prime Venture Partners.
This is a rare transaction in the venture capital (VC) and private equity (PE) industry in India where the interest of LPs has changed hands at the level of the fund itself.
In a statement, Prime Venture Partners said the transaction helped deliver healthy, above-decile returns to its LPs in its ninth year of operation and extended the fund a further four years. In addition, Foundation Private Equity has now become the sole LP of Prime Venture Partners’ first fund, he added.
Separately in an interaction with VCCircle, Sanjay Swamy, co-founder and managing partner, Prime Venture Partners, said the transaction generated four times the returns for his LPs.
Prime Venture Partners had launched its first $8 million Mauritius-based fund in 2012. The fund’s LPs included venture capital firm Mayfield, Chamath Palihapitiya’s Social Capital, Yahoo co-founder Jerry Yang and others. high net worth (HNI) from Silicon Valley. , Swamy said.
He explained that the transaction showed that even without exiting portfolio companies, venture capital firms can offer at the fund level itself a “meaningful exit” to its LPs.
“This is something the market will find very attractive from an LP perspective. There are only changes to the duration of the fund and no impact on portfolio companies,” he added.
Prime Venture Partners’ first fund portfolio consists of seven companies, including interactive learning startup Quiziz, which raised a Series B funding round led by Tiger Global last year, and Happay, which was acquired by Kunal Shah led by Cred late last year.
Swamy also said the deal could find more takers in the industry. He added that what worked in favor of Prime Venture Partners was its concentrated portfolio.
“Funds that have a small, concentrated portfolio and hold a significant stake in it will be attractive for such results,” he said. He also said that the structure of the deal could also vary and that LPs could also perform a partial release instead of a full release.
Jeremy Foo, co-founder and partner of Foundation Private Equity, said in the statement that he has so far taken a patient approach to assessing venture capital opportunities in India, and is now delighted to support “a very high quality GP team and portfolio”. ” with its first transaction in India.
Candor Asia Ltd acted as advisor for this transaction.
There have been rare instances of side deals in the PE/VC industry in India where the interests of LPs have changed hands. In March 2018, TR Capital acquired a 50% limited stake in the first fund of local private equity firm Tano Capital. In the same year, Swiss-headquartered global asset manager Capital Dynamics offered non-institutional LPs an exit from the first fund of the Asian Healthcare Fund.
While Prime Venture Partners facilitated the full exit of its LPs from its first fund, the venture capital firm is also nearing the final close of its fourth fund, Swamy said.
Prime Venture Partners announced the first close of its fourth fund at $75 million in August last year.
The fourth fund has a target corpus of $100 million. The startup investor closed its second fund worth $46 million in 2016 and closed its fund III in 2018 at $72 million.
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