Foundation PE acquires entire LP interest in Prime Venture’s debut VC fund

 Foundation PE acquires entire LP interest in Prime Venture’s debut VC fund

Foundation Private Equity, a secondary PE specialist, has acquired Limited Partner interest in early-stage venture capital firm Prime Venture Partners’ first fund via a LP tender offer process, marking a rare transaction in India.

Most transactions in the secondaries market in India have been portfolio secondaries where specialist funds buy equity stakes held by a PE or VC fund in a portfolio company. But such transactions have been few and far between.

To be sure, there have been some secondary deals involving a few LPs by Asian secondaries specialist TR Capital and a few synthetic secondaries deals by VC firms Lightbox and Avataar. There also have been some portfolio secondaries deals such as JP Morgan’s purchase of Canaan Partners’ India portfolio for about $200 million in 2015.

Prime Venture’s first fund is a Mauritius-based vehicle. It was anchored by Social Capital. This fund was the first investor in seven companies. These are ed-tech startup Quizizz, fintech startup Happay, US-based pet tech company Waggle, HackerEarth, Synup, Smartowner and Vidgyor.

Quizizz is also backed by Tiger Global and Yahoo co-founder Jerry Yang. Happay was recently acquired by fintech unicorn Cred for $180 million.

Prime Venture said Thursday it has delivered a healthy, top-decile return to its LPs in its ninth year of operation and has extended the fund by four years.

The transaction has resulted in over 4x multiple of invested capital (MOIC) for the LPs. Back-of the-envelope calculations suggest this translates into benchmark returns given conventional tranched calls for money.

PE and VC funds typically have a 10-year lifecycle, though it can be extended if the LPs agree to it.

Prime Venture had raised the first fund in 2012. Foundation PE now becomes the sole LP in the fund.

Prime Venture was started in 2012 with an Indian advisory office led by Shripati Acharya, Sanjay Swamy, Bala Parthasarathy and Amit Somani. It has raised four funds since its inception and manages more than $250 million. Last year, it marked the first close of the new $100-million fund.

Foundation Private Equity, started by industry veterans Jason Sambanju and Jeremy Foo, was formed in 2017.

Foo said the Foundation PE team has taken “a patient approach” thus far with evaluating venture opportunities in India. “We are excited to be backing a very high-quality GP team and portfolio with our first transaction in India.”

Swamy, co-founder of Prime Venture, said the deal was a validation of the VC firm’s “concentrated portfolio with active support” strategy.

Singapore-based Candor Asia Advisors Pte Ltd, a specialist in complex secondaries and GP-led deals, was the sole advisor to this transaction.

Vivek Sinha

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