Companies
360 One launches secondaries fund with a ₹4,000-crore target corpus
Summary
The asset manager is also raising a healthcare-focussed private equity fund and plans to launch an early-stage venture capital fund as well as a fourth pre-IPO fund over the coming year.MUMBAI : Asset manager 360 One WAM Ltd is in talks with investors to raise a ₹4,000-crore secondaries fund—a vehicle typically used to buy stakes in companies from other investors or replace another investor in multiple firms.
The alternatives asset manager is also in talks to raise a healthcare-focussed private equity fund, Sameer Nath, chief investment officer and head of 360 One Asset’s venture capital and private equity business, said on Tuesday.
360 One WAM, which handles nearly $2.9 billion in assets under management under its alternatives strategies, also plans to launch an early-stage venture capital fund as well as a fourth pre-IPO fund over the next year, Nath said.
“We are halfway through the fundraise and have made five investments," Nath said about the secondaries fund, declining to name the investments. Typical investments will be in the range of ₹150 crore to ₹200 crore, he said, adding that the fund will be sector-agnostic.
This is 360 One Asset’s first secondaries fund. Several foreign investors such as TR Capital, Foundation Private Equity, and New Quest Capital have launched secondaries-only funds that operate in India. Large private equity firms such as KKR and Blackstone also acquire secondary stakes in India.
360 One Asset will be able to offer more options to Indian companies and investors in the sub- ₹200 crore to ₹300 crore range, Nath said.
The need for secondaries
In addition to the base corpus of ₹4,000 crore ($480 million), 360 One Asset’s secondaries fund will have a greenshoe option to raise a larger fund. A greenshoe option allows a fund manager to raise more capital than planned if it sees greater demand.
Nath said that over the last decade, private equity and venture capital funds had invested over $250 billion in India but had realised only $160 billion in exits, or share sales.
“There is a big pool of capital that is relatively illiquid, which will be seeking liquidity in some shape or form in the coming years. Some of it will find its way into the public market. Some of it will have an M&A or a strategic outcome, but there will still be a lot of capital seeking liquidity and that's where we come in," Nath said, explaining the rationale for the secondaries fund.
The secondaries market also stands to benefit from a regulatory tailwind, he said. The Securities and Exchange Board of India has declined extensions as several Indian investors near the end of their fund duration. “There are dozens of investors in this situation who will require liquidity solutions," Nath said.
In recent months, investors have looked at other options too to generate liquidity for their limited partners, or investors. Mint reported on Tuesday that multiple investors such as India Quotient and Multiples PE were looking to raise continuation funds to provide exits to their investors while also retaining some stake in their winning portfolios.
Also read | Why continuation funds are the new favourites in investor arsenals
360 One expects to structure its secondaries fund so that it can generate liquidity within 3 years for its portfolio. As such, up to half of the corpus is in invested in pre-IPO companies.
“We are not investing in any companies where we don't have visibility into liquidity within three years," Nath said. “We have the first-mover advantage, but we don't expect to be the last."
Specialist PE funds
As for 360 One’s plans to raise a healthcare-focussed fund, Nath said about half the targeted corpus had been raised, without providing more details. He added that one of the investments from the healthcare fund was in Hyderabad-based audiology chain Hearing Solution.
The advisory board for the healthcare fund includes Manipal Group founder Ranjan Pai as well as Ashutosh Taparia, one of the founders of women’s healthcare-focussed Famy Care Pvt. Ltd.
In August last year, Mint reported that 360 One planned to launch sector-specific funds, starting with a healthcare fund, and then subsequently launch funds in financial services, consumer, and technology.
“I don’t think we are set up to compete as a generalist (on the private-equity side). On the PE side, our right to win an edge will be industry-focused thematic funds," Nath said at the time.
360 One has not yet decided a corpus for its early-stage venture capital fund, which will be run by former Lightspeed Venture Partners executive Abhishek Nag.
