Key Takeaways
- • Fundamentum co-founder Ashish Kumar says four or five Indian VC and PE firms will likely try to build equity value in their fund-management platforms within two to three years, though most have no firm plans yet.
- • Kumar identifies three drivers: equity value in the asset management business itself, the longer 15-25 year growth cycles of technology companies, and limited partner demand to hold successful assets beyond a single fund's life.
- • F2A, which Kumar co-founded with Fundamentum, is focused on deploying its recently raised $370 million (₹3,500 crore target) maiden fund, and a public listing is "too early to consider."
- • Kumar argues entrepreneur-led firms are better placed to build enduring platforms, and says succession is the key test for venture firms, many of which are closely tied to founding partners.
Summary
Kumar cited three drivers. The first is the opportunity to create equity value in the asset management business rather than relying solely on fees and carry from individual funds. The second is the longer growth trajectory of technology companies: traditional private equity funds typically hold investments for five to six years, while successful technology businesses can keep growing for 15 to 25 years. The third is demand from limited partners, who do not want to select a new fund every five, eight or 10 years and would prefer the manager continue holding a successful asset. Continuation funds are one vehicle through which managers could retain such businesses beyond the life of an individual fund.
Kumar believes entrepreneur-led firms may be better positioned to build these platforms than those run by professional fund managers, because founders tend to think in longer time horizons. He also framed succession as a central challenge, warning that "most venture funds die after their initial founders move out." According to a recent internal F2A study, of roughly 400 funds in India, around 300 were started in the past five years.
Kumar said a listing is too early to consider for F2A, if it happens at all. The firm is focused on investing its recently raised $370 million fund. Mint reported on 13 October that F2A raised its maiden fund target to ₹3,500 crore from ₹3,000 crore, including a ₹2,500-crore domestic allocation, after stronger-than-expected interest from local investors. Listed private equity managers are established in the US, including Blackstone (2007), KKR (2010), Apollo Global Management (2011), Carlyle Group (2012) and TPG (2022). In India, Gaja Capital listed on the NSE and BSE on 26 August as one of the country's first mainstream pure-play private equity and alternative asset management companies to go public.
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