Indian private equity and venture capital managers are weighing ownership in their management businesses, with Fundamentum general partner Ashish Kumar telling Mint four or five firms may test the model in two to three years.
The proposal centers on the management platform itself. Alongside fees and carried interest from individual funds, firms could build value through equity ownership in their management businesses, Kumar said. Mint reported that most firms are still considering the idea and have no firm plans. The interview did not name potential participants.
Kumar said Fundamentum Frontier Advisors (F2A) was focused on deploying its recently raised fund. A public listing was not under consideration at the time, he said, and might never happen.
Kumar cited the different time horizons of technology companies and private equity funds. Successful technology businesses may continue growing for 15 to 25 years, he said, while funds typically hold investments for five or six years. Continuation funds could let managers retain exposure to successful companies after an original fund ends, Kumar said.
Kumar said some limited partners would prefer to maintain exposure to a successful company for longer. Kumar also raised succession as a challenge for firms closely identified with their founders. “Can you structure it in a way that the institution continues beyond its founders?” he asked.
The National Stock Exchange’s events record lists Gaja Alternative Asset Management Limited’s listing on Aug. 26. It offers a recent example of an asset manager entering public markets, but does not establish that F2A or the firms in Kumar’s estimate have plans to list.
