India’s Early Investors Are Playing Offence with Secondaries

With the news of Harindarpal Singh Banga set to sell a $150 million stake in Nykaa through a block deal, it offered a useful window into how experienced investors manage their positions in today’s market. As one of the earliest backers of the company, Banga chose to realize part of his gains more than three years after Nykaa went public while still retaining some stake. His approach reflects a larger shift underway in India’s private market culture: secondaries are becoming strategic instruments rather than reactive measures.

Banga had already sold a smaller tranche of shares in August 2024. These transactions, taken together, demonstrate a measured use of liquidity – not a full exit, but a reweighting of exposure. The underlying belief in Nykaa appears unchanged. What’s changed is the level of capital at risk, adjusted in response to evolving public market conditions.

This is what secondaries increasingly represent for India’s early investors: a way to turn paper gains into usable capital without walking away from the companies they helped build. They are being used to manage concentration, rotate into new ideas, and engage with markets on more flexible terms.

India’s private market ecosystem is maturing rapidly, and secondaries are becoming an integral mechanism for capital mobility. They allow experienced investors to redeploy funds, create room for new institutional participants, and support the broader goal of efficient capital recycling.

A sign of maturity

Secondaries once carried the implication of distress. Today, they more often signal discipline. Investors who participated early in now-listed companies are finding ways to balance conviction with capital allocation. Rather than waiting for the perfect moment to fully exit, many are choosing to take gains in phases. This staggered monetization helps reduce downside exposure while allowing them to remain long on businesses they still believe in.

In Banga’s case, the timing was notable. Nykaa’s stock has recovered meaningfully from its lows, and the transaction landed during a period of improved sentiment and price performance. Such execution reflects an understanding of public market cycles and investor psychology, both of which are increasingly essential for private market participants navigating post-IPO environments.

This new phase of strategic exits also reflects a shift in investor behavior, from reactive to proactive. Rather than waiting for liquidity events or sudden inflection points, investors are actively calibrating exposure in response to broader macro cycles, interest rate regimes, and sector-specific tailwinds.

The ability to engage markets on one’s own terms, including timing, size, and pricing, gives investors agency. It reduces reliance on IPO windows or M&A events and creates a continuous, rather than episodic, relationship with liquidity.

Recycling capital into the next wave

Partial exits of this kind are also vital to capital formation. Proceeds from secondary sales often find their way into newer opportunities – across sectors like healthcare, deeptech, AI, and climate. When long-horizon capital is recycled thoughtfully, it becomes a growth engine in itself.

This is especially important in India, where many promising startups are still undercapitalized relative to their global peers. Early investors who have built conviction and discipline through past cycles are well-positioned to identify and support the next generation of founders. Their capital, now liquid and informed by experience, can accelerate emerging sectors that require patient backing.

This behavior signals a shift from linear to strategic portfolio thinking. Investors are not merely cashing out; they are rebalancing their capital stack to reflect future-forward conviction. A partial exit from a consumer tech IPO might lead to an anchor cheque in a Series A deeptech round.

Reinvestment cycles are becoming tighter, smarter, and more intentional. The same capital that seeded India’s unicorns in the past decade is now flowing into frontier areas like SaaS, EV platforms, synthetic biology, and AI-led enterprise tools. Secondary liquidity is the hinge that connects experience with experimentation.

Secondaries as a structural layer

Deals of this scale also support the larger health of India’s capital stack. Institutional interest in a $150 million secondary block deal sends a clear message: demand exists for high-quality exposure, even outside of a primary raise. In this case, the buyers were foreign institutional investors (FIIs), further underscoring that secondaries aren’t viewed as fire sales but rather as opportunities to acquire meaningful stakes in proven businesses. When global capital allocators step in through the secondary window, it validates both the underlying company and the maturing structure of India’s private-to-public transition.

Just as importantly, they normalize the idea that early investors don’t need to be locked in indefinitely. When capital can move more freely without affecting a company’s perception, the entire ecosystem becomes more investable.

In fact, some of the world’s largest allocators, including sovereign wealth funds, pension pools, and endowments, are increasingly treating secondaries as their preferred point of entry. They allow for scaled positions in companies with clear track records, audited financials, and post-IPO governance standards.

This layered participation also enhances market depth. Companies are no longer reliant on IPO proceeds for long-term capital. Instead, healthy turnover among early holders invites a broader, more diverse investor base.

A model of rotational investing

What stands out most about this case is the level of intentionality. Some early investors are beginning to use secondaries as a tool – not just once, but across multiple points in the company’s public life. This suggests a mindset shift among India’s investor class, where exposure is managed dynamically rather than in absolutes. Ownership is no longer a binary position. It’s something that evolves over time, in line with market context and individual risk appetite.

As more investors adopt this approach, secondaries will continue to move from the margins to the mainstream. They will be seen less as endpoints, and more as part of a continuous cycle of belief, monetization, and reinvestment.

This block deal is a reminder that in India’s evolving capital landscape, liquidity doesn’t have to mean exit. It can mean readiness. It can mean rotation. And increasingly, it reflects the kind of long-term thinking that allows investors to participate in the country’s next chapter, without having to walk away from the last one.

In the years ahead, secondaries will likely become a structural feature of India’s private market ecosystem. They will allow capital to move efficiently, founders to retain stable cap tables, and new investors to engage with conviction.

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