India PE Secondaries: A Perfect Storm

Lensbridge Perspective  ·  India Private Markets  ·  Secondaries

We have been investing in Asian secondaries since 2005. In that time, we have seen individual factors create periodic opportunities in India's private equity market. What we are observing today is different: four structural forces converging simultaneously to produce a dislocation that the secondary market is uniquely positioned to address. The forces are a record accumulation of unrealised assets in funds now at or beyond their expected hold periods; a sustained distribution drought that has left LPs exhausted from waiting; a meaningful correction in Indian public equity valuations that has recalibrated exit assumptions; and a depreciating rupee compounded by elevated oil prices from the Middle East conflict, which is eroding the dollar value of Indian PE assets with every month that distributions are delayed. Taken together, they constitute the most concentrated opportunity we have seen in this market.

The Unrealised Asset Overhang

India's AIF ecosystem expanded rapidly through the 2018 to 2022 vintage window, with Category II AIFs raising a cumulative approximately $134 billion by September 2025 and India's PE-VC investment base reaching approximately $43 billion in 2024 (Bain and Company). That pace of capital formation created a vintage overhang that is now coming under acute pressure. Globally, private equity holds approximately $3.6 trillion of unrealised value across roughly 29,000 unsold companies (Bain, 2026 Global Private Equity Report). India's share is proportionally significant, concentrated in the 2018 to 2021 vintages whose fund lives are now stretching well beyond plan. Among Asia-Pacific buyout funds from the 2017 to 2019 vintage, only 26% had exited by their fifth year of ownership, against 43% for the 2011 to 2013 cohort (Bain, Asia-Pacific PE Report 2025). Average hold periods globally have extended to 6.4 years in 2025, against a 2015 to 2019 baseline of four to five years. In India, where public market exits execute over years of lock-up and block trades rather than a single event, GPs are holding assets considerably longer than planned. That extended holding creates the supply of secondary transactions.

The DPI Crisis

Category II AIFs from the 2015 to 2020 vintage cohort have delivered average DPI of just 0.5x to 0.8x, well below LP expectations at the time of commitment (Houlihan Lokey, India PE-VC Exit Landscape 2025). This is not an India-specific anomaly: distributions as a percentage of NAV fell to 11% globally in 2024, the lowest in over a decade (Bain). But India's dependence on public market exits makes the problem more acute here. IPOs, followed by months or years of lock-up and block trades, are the primary exit route. When public markets are disrupted, the alternative channels are thin. Sponsor-to-sponsor volumes are growing but remain modest; global strategic buyers arrive at data rooms and rarely cross the line. The result is that LPs who committed capital expecting distributions within five to seven years are now rebalancing through the secondary market rather than waiting. ChrysCapital's $700 million single-asset continuation vehicle for its NSE stake, announced in 2024, established the GP-led secondary template for India at institutional scale. We expect a meaningful increase in India-domiciled continuation vehicles through the 2026 to 2028 window.

The Public Market Correction and Secondary Pricing

The Nifty 50 peaked at 26,277 in September 2024. By February 2025, it had fallen approximately 16%, with the trailing PE ratio declining to 21.7x, below both its five-year average of 23.9x and its ten-year average of 26.7x (Business Standard; Upstox). Foreign institutional investors withdrew approximately $13.4 billion from Indian equities in the first two months of 2025 alone. For GPs who had been planning exits into the prior bull market, the correction has reduced IPO optionality and made block trade execution at acceptable prices harder. The practical effect is that GPs who would have resisted secondary solutions at 2024 valuations are now willing to engage. For secondary buyers, the correction creates something that was largely absent in 2022 to 2024: a rational discount to NAV. India-focused secondary assets were priced at or close to NAV during the bull run, because GPs and LPs believed public market exits were imminent. A 16% benchmark correction, with steeper declines in mid and small-cap names, has introduced a gap between marks and realistic exit expectations. That gap is the secondary buyer's entry point.

The Rupee and Oil: A Fourth Force Compressing Dollar Returns

For the majority of LPs in India-focused private equity funds, the reference currency is the US dollar. This creates a dimension of loss that NAV marks in rupees do not capture. The Indian rupee depreciated more than 8% against the dollar over the past year, touching a record low of approximately Rs 91.55 per dollar in early 2026, making it the worst-performing major Asian currency in 2025. An LP holding a fund interest marked at Rs 100 of NAV has already lost over 8 cents on every invested dollar from currency depreciation alone, before any consideration of exit uncertainty or portfolio company performance. The longer distributions are deferred, the deeper that currency drag compounds.

Oil is the direct transmission mechanism between the Middle East conflict and the Indian economy. India imports approximately 85% of its crude oil requirements, and Brent crude above $90 per barrel during the months of US-Iran military escalation translated directly into a widening current account deficit, higher inflation, and further rupee pressure. Every dollar increase in the oil price adds approximately Rs 180 billion to India's annual import bill, increasing dollar demand and exerting downward pressure on the rupee. The Pakistan-brokered ceasefire brought oil back toward the $75 to $80 range, providing some relief. But as long as the underlying tensions over the Strait of Hormuz remain unresolved and the ceasefire remains fragile, oil price risk is not off the table. For an LP sitting on unrealised India PE exposure, the calculation is stark: each passing quarter of delayed distribution brings additional currency erosion on top of the equity correction. The incentive to seek secondary liquidity now, rather than wait for a natural exit that may be 12 to 24 months away, has rarely been stronger.

India's Secondary Market: Scale and Momentum

India's secondary market is growing rapidly. Secondary deal values rose from approximately $3.4 billion in FY24 to approximately $4.5 billion in FY25, and H1 FY26 volumes had already approached full-year FY25 levels (SEBI data via The Unlisted Intel). In 2024, secondary transactions became the second-largest exit route for India-focused PE, behind only public market transactions. The global backdrop reinforces the structural case: secondary AUM reached $526 billion globally as of end 2024 (Preqin), having grown roughly 60 times since 2000 against 20 times growth for private equity overall, and yet still represents less than 5% of total PE AUM. India's domestic secondary ecosystem is substantially less developed than the global market, which means the demand for liquidity solutions materially exceeds available dedicated capital. That supply-demand imbalance is the central structural opportunity.

Our View

Each of the four forces described above would independently create secondary opportunity. Their simultaneous occurrence is what makes this moment exceptional. The unrealised asset overhang generates motivated sellers. The DPI drought converts LP patience into action. The public market correction creates rational pricing. And the rupee depreciation, amplified by oil-driven macroeconomic pressure, adds a currency clock that is ticking against every LP who continues to hold without a distribution path in sight. The most compelling opportunities are mid-market LP secondaries in 2017 to 2020 vintage funds where DPI pressure is most acute, GP-led continuation vehicles anchored by quality single assets, and venture secondaries in the 2019 to 2021 cohort where growth-stage companies need liquidity before IPO routes reopen. India's private capital market is being evaluated on its ability to convert paper value into distributed cash. The window for building a meaningful India secondaries portfolio at today's pricing will not remain open indefinitely.

This commentary is prepared by Lensbridge Capital Pte Ltd for informational purposes only. It does not constitute investment advice or an offer to buy or sell any security or fund interest. Market data references are sourced from publicly available reports by Bain and Company, Preqin, Houlihan Lokey, Jefferies, SEBI, and other third parties, and are used for illustrative purposes only. Rupee-to-dollar conversions use an approximate rate of Rs 84/USD for historical figures and Rs 90/USD for current figures, consistent with market rates at the respective reference dates. Past performance is not indicative of future results.