In 2016, when Ratan Tata quietly invested INR 66 lakhs in a budding startup called FirstCry, few could have predicted the company’s meteoric rise. Fast forward to the recent IPO, and Tata’s modest bet has paid off handsomely. At the upper end of the IPO price band, his shares, acquired at an average of Rs 84.72 each, have delivered a staggering five-fold return. And if he’s still holding onto them post-IPO, that return has swelled to an impressive seven times the original investment. It’s the kind of success story that makes any High Net Worth Individual (HNI) sit up and wonder: “Why didn’t I get in on that?”
Here’s the thing—HNIs today do not need a multi-crore corpus or an exclusive invitation to get a seat at the (cap) table.
Enter: The Great Indian Secondary Market, where late-stage opportunities are increasingly within reach for HNIs.
Once the province of distressed asset buyers, the secondary market has evolved into a critical arena for private equity, where general partners (GPs) and limited partners (LPs) alike can diversify portfolios, disburse capital, and secure liquidity. In India, secondaries and buyout activities have been particularly vibrant, accounting for about 50% of overall deal value and a whopping 62% of transactions exceeding $50 million. The rationale? Profitable companies are prized in Indian markets, often more so than in the U.S. or Europe, making them prime targets for exits via IPOs, secondary transactions, or mergers and acquisitions.
But what makes secondaries so appealing to HNIs looking for a second chance at a windfall like Tata’s? It’s partly the discount. Secondary deals often occur at a discount to the net asset value (NAV), offering a lower entry point compared to primary market investments. More importantly, these investments are typically in mature assets, closer to liquidity events like IPOs or acquisitions, offering faster potential returns than primary investments.
However, navigating this market isn’t easy. Practising the science of due diligence in the secondary market is an intricate art. With deals happening privately, often involving stakes in companies that aren’t publicly traded, there’s no simple market price to fall back on. This complexity requires not just capital but also a keen eye for detail and a deep understanding of the market. Even seasoned players can stumble if valuations contract or macroeconomic conditions sour. That’s why choosing the right fund manager is crucial—one with a solid track record and a strategy tailored to perform across market cycles.
Some HNIs love the thrill of chasing exits and profitability from the start, and that’s great.
Secondaries, however, offer a unique advantage for investors who seek to tap into late-stage winners—companies that have already proven their worth and are on the brink of significant liquidity events. And as more Indian companies hit the profitability threshold, deal activity in the secondary market is expected to surge.
For HNIs, the secondary market is more than just a second chance; it’s a strategic avenue to build a robust private markets portfolio, capturing the kind of late-stage success stories that might otherwise remain out of reach.
Grasp the opportunity to ride the next wave of Indian success stories — Learn more about the Indian secondary market
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