Equities

ChrysCapital's $700M NSE Stake Deal Marks India PE Shift

ChrysCapital's $700 Million Continuation Fund Revolutionizes Private Equity in India, Offering New Liquidity Options

By Mackenzie Crow

5/15, 03:59 EDT
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Key Takeaway

  • ChrysCapital's $700 million continuation fund deal for a stake in the National Stock Exchange of India Ltd showcases a new liquidity strategy for private equity in India.
  • The deal, exceeding initial targets and involving global investors like HarbourVest and LGT Capital, marks a significant shift towards sophisticated financial structures in Asia.
  • With over $5 billion managed and $6.5 billion returned to investors, ChrysCapital's innovative approach reflects the evolving landscape of private equity investment in India.

New Investment Strategy in India

A novel approach for private equity funds to distribute profits to investors is emerging in India, potentially revolutionizing the way investments are managed in the region. ChrysCapital Management Co. has recently utilized a continuation fund to secure $700 million from investors, aiming to retain its minority stake in the National Stock Exchange of India Ltd. This method represents a significant shift in portfolio management, offering private equity managers enhanced flexibility in asset management and the opportunity to extend their investment horizons.

Kunal Shroff, managing partner at ChrysCapital, highlighted the transaction as a pivotal moment for private equity funds in India, providing them with an alternative avenue for managing their investment stakes. The process involves creating a continuation fund to transfer assets from previous funds, allowing investors to either reinvest or liquidate their positions. Shroff emphasized the importance of this development in signaling to investors that India offers viable liquidity options beyond traditional block trades or sales to other private equity funds.

Global Context and Local Impact

While single or multi-asset continuation funds have become increasingly popular in the US and Europe, accounting for 76% of the private equity deal flow globally last year, their adoption in Asia remains limited. The success of ChrysCapital's continuation fund, which exceeded its initial target by more than double, marks a significant milestone in the Asian secondary market. Shroff's decision to roll over all carried interest into the new fund underscores the firm's commitment and confidence in the investment.

This strategy not only demonstrates a novel way for private equity funds to manage their assets but also reflects the growing sophistication of India's financial markets. The involvement of new investors such as HarbourVest Partners LLC, LGT Capital Partners AG, and Pantheon Ventures Ltd, with UBS Group AG advising on the deal, further validates the potential of continuation funds in the region.

ChrysCapital's Growth and Future Prospects

ChrysCapital, with over $5 billion of assets under management and a track record of returning $6.5 billion to investors through more than 70 exits, stands as a testament to the evolving landscape of private equity investment in India. The firm's successful fundraising to maintain its stake in the National Stock Exchange of India Ltd, valued between $17 billion and $18 billion, highlights the significant growth potential within the Indian market.

Despite the long-anticipated plans for taking NSE public, Shroff notes that these plans have not yet been finalized, indicating a cautious approach to future growth strategies. This careful planning reflects a broader trend of private equity funds in India exploring innovative methods to maximize returns and sustain long-term growth.

Management Quotes

  • Kunal Shroff, Managing Partner at ChrysCapital:

    "The success of this continuation fund is a positive signal to investors that India can get you liquidity — not just from block trades of a billion dollars that some of our peers have done, or through sales to other PE funds or strategies."