7 Myths About Private Market Secondaries in India

Private market secondaries are becoming a larger part of India’s private-capital ecosystem, but several assumptions about the category persist: that good assets do not get sold, that secondaries are distressed transactions, or that they always happen at steep discounts.

India’s secondary transaction value reached approximately ₹377 billion in FY25, up 32% year-on-year, according to Oister Global × CRISIL Intelligence. Average deal sizes have also increased significantly since FY20.

As the market grows, here are seven common assumptions about private market secondaries in India and what the available evidence tells us.

TL;DR

• A shareholder selling does not necessarily indicate a problem with the underlying asset.
• Secondaries can arise from portfolio rebalancing, fund timelines, employee liquidity and other reasons.
• EY found 85% of concurrent Indian primary and secondary transactions were priced similarly.
• A larger discount does not automatically mean a better transaction.
• Pre-IPO investing is only one part of the secondaries market.
• Secondaries can create investor liquidity without requiring the underlying company itself to exit.

Myth 1: Why Would Anyone Sell a Good Private-Market Asset?

If a company is performing well, why would an existing shareholder sell?

Because the shareholder and the company do not necessarily operate on the same timeline.

A PE or VC fund may be reaching the later years of its fund life. An early investor may have achieved its return objective. An employee may want to monetise ESOPs. An institution may be rebalancing its portfolio.

None of these situations, on their own, determines the quality of the underlying company.

Public markets make this distinction intuitive. Shares in high-quality listed companies change hands every day because investors have different liquidity needs, return objectives and investment horizons.

The seller’s timeline and the company’s timeline are not always the same.

Myth 2: Secondaries Are Distressed Sales

Secondaries have historically been associated with investors seeking liquidity from illiquid portfolios. But the market has evolved considerably.

Globally, secondaries are now used for portfolio management, LP liquidity and GP-led continuation transactions. Jefferies estimates that global secondary transaction volume reached a record $240 billion in 2025, up 48% year-on-year.

India is also seeing a broader set of use cases, including portfolio rebalancing, ESOP monetisation and pre-IPO ownership changes.

A seller’s need for liquidity can create a transaction. It does not automatically determine the quality of what is being sold.

Seller circumstances and asset quality are two different questions.

Myth 3: Secondaries Always Trade at a Discount

Indian transaction data provides an interesting counterpoint to this assumption.

EY analysed 306 concurrent primary and secondary transactions involving Indian new-age companies between 2019 and 2025. It found that 85% of secondary transactions were priced similarly to their corresponding primary rounds.

Discounts occurred in 15% of the transactions analysed. Where they occurred, the average discount was approximately 19%.

So “secondary” does not automatically mean “discounted”.

Secondary describes how ownership changes. It does not tell us what the price will be.

Myth 4: A Bigger Discount Means a Better Secondary

Even when a secondary is available at a discount, the percentage alone provides limited information.

The important question is: discount to what?

A 20% discount to a recent arm’s-length transaction is different from a 20% discount to a funding-round valuation established two years ago. The company’s performance, public-market comparables and broader valuation environment may all have changed since then.

A large discount to an unrealistic reference valuation can still result in an unattractive price.

Price the asset, not the discount.

The quality of the underlying asset and the price being paid ultimately need to be considered together.

Myth 5: Secondaries Are Basically Pre-IPO Investing

Pre-IPO transactions can be secondaries. But the two terms describe different things.

Pre-IPO describes where a company is in its lifecycle. Secondary describes how ownership changes hands.

A direct secondary can occur years before an IPO. The broader market also includes LP-led transactions, in which an investor sells an interest in a private-market fund, and GP-led transactions involving existing fund assets.

Globally, this is already a substantial market. Of the $240 billion of secondary transactions in 2025, Jefferies estimates $125 billion was LP-led and $115 billion GP-led.

Pre-IPO secondaries are therefore one part of a much broader category.

Myth 6: The Seller Must Know Something the Buyer Doesn’t

Information asymmetry exists in private markets, which makes understanding why an asset is available important.

But the presence of a seller is not itself evidence that the seller possesses negative information.

An LP may require liquidity. A fund may be approaching maturity. A founder or employee may have personal liquidity requirements. An early investor may simply want to realise returns.

Equally, seller motivation should not be ignored.

Seller motivation is something to understand, not a substitute for understanding the asset.

The underlying business, valuation, governance, shareholder rights, transaction structure and potential routes to future liquidity remain separate considerations.

Myth 7: A Secondary Is Just Another Type of Company Exit

This is perhaps the most important distinction.

In an acquisition, ownership of the underlying company may change. In an IPO, the company enters the public market.

A secondary can work differently.

One investor can sell an existing stake to another investor while the company remains private and continues operating.

That separates two timelines that are often treated as one: when an investor wants liquidity and when the underlying company reaches an exit event.

A secondary can create investor liquidity without requiring the underlying asset itself to exit.

What Do These Myths Tell Us About India’s Secondaries Market?

Many misconceptions around secondaries originate from interpreting the decision to sell as a judgement on the asset.

But as private markets become larger, ownership can become more dynamic.

India’s secondary transaction value reached approximately ₹377 billion in FY25, while average transaction sizes have increased significantly since FY20. Globally, secondaries have already developed into a $240 billion annual market.

The common thread is not that every seller wants out of private markets. It is that different investors can have different timelines within the same asset.

That is the structural role secondaries can play as India’s private markets mature.

It also changes the question from simply “Why is someone selling?”

The more complete questions are: What is being sold? Why is ownership changing? What is the asset worth?

Understanding those distinctions is increasingly important to understanding private market secondaries in India.

Disclaimer

This article is for educational and informational purposes only and reflects observations on the development of private markets. It does not constitute investment advice, an offer, solicitation or recommendation to invest in any security, fund or strategy.

Brand Manager

Aayushi Thakur

Frequently Asked Questions

Q: What are private market secondaries?

A: Secondaries are transactions in which an existing investor sells a stake in a private company or a private market fund to another investor. Ownership changes while the company stays private and keeps operating.

Q: Why would an investor sell a stake in a good private company?

A: The seller’s timeline and the company’s timeline are not always the same. A fund may be nearing the end of its life, an early investor may have met its return goal, an employee may want to monetise ESOPs, or an institution may be rebalancing its portfolio.

Q: Do secondaries always trade at a discount?

A: No. EY analysed 306 concurrent primary and secondary transactions in Indian new-age companies between 2019 and 2025. It found that 85% were priced similarly to the primary round. Where discounts did occur, they averaged about 19%.

Q: Are secondaries the same as pre-IPO investing?

A: No. Pre-IPO describes where a company is in its lifecycle, while secondary describes how ownership changes hands. Secondaries also include LP-led sales of fund interests and GP-led transactions involving existing fund assets.

Q: How big is the secondaries market in India?

A: India’s secondary transaction value reached about ₹377 billion in FY25, up 32% year on year, according to Oister Global and CRISIL Intelligence. Globally, secondary volume reached a record $240 billion in 2025, according to Jefferies.

Sources

Oister Global × CRISIL Intelligence — No IFs About AIFs 3.0

EY India — Rethinking Secondary Transaction Discounts in Indian Start-ups

Jefferies — 2025 Global Secondary Market Review

Hamilton Lane — The Truth About Secondaries