The partnership aims to invest $500 million in the next two years as secondary private market transactions in India gain momentum. According to Oister Global, $7.7 billion had been transacted through private secondary deals in India in the last four to five years. This exceeds the total amount raised via IPO exits during the same period.
Speaking to ET, Oister Global co-chief executive officer Sandeep Sinha said the new fund — Oister Tribe Ace Fund — has been set up as a category-II alternative investment fund.
“It’s a shorter duration (five-year) fund, where we have pre-selected a few companies which are in Series C, Series D level of maturity. These are companies that are looking to do their IPOs within the next 12-36 months, which means that there is a faster path to liquidity,” Sinha said.
“All these companies, which we’re talking about, are the ones which have fairly matured business models, are market leaders in their segments, and are not in need for capital in the short duration…they are either breakeven or on the path to breaking even, and have at least about 1.0-1.5 years’ worth of liquidity in hand,” he said, detailing the new fund’s investment thesis.
Oister Global would be investing in the new fund from its balance sheet while also bringing in additional limited partners, or sponsors. Tribe Capital India will also invest as a part of the sponsorship capital of the fund, he said.
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“I think as we go along in the journey, we are expecting some of Tribe’s global LPs will also start stepping in,” Sinha said.Tribe Capital India was set up as an asset management company earlier this year and is co-owned by Tribe Capital’s cofounder Arjun Sethi, Shiprocket cofounder Vishesh Khurana and Raj Snehil Juneja, who has been investing in Indian startups.
“India presents an incredible opportunity for secondary transactions. As investors seek liquidity and companies gear up for larger exits, I’m excited to help identify and empower the next generation of successful startups. Our partnership with Oister creates tremendous synergies to capitalise on India’s potential,” Sethi said.
Oister Global has earlier backed firms such as Blume Ventures and Stride Ventures.
ET has been reporting about the growing trend of secondary stake sales across late-stage startups such as Lenskart, Meesho, Purplle, Ather Energy, Healthkart and Shadowfax. In April this year, ET reported that Piyush Gupta, a managing director at Peak XV Partners, was exiting the venture capital firm to launch his own fund that will focus on secondary transactions.
On July 5, ET reported that secondary stake sales and buyouts dominated large deals of $50-500 million in the startup space during the first six months of 2024 when total funding fell, but late-stage activities picked up pace.
A secondary deal is between existing and incoming investors, and the cash doesn’t go into the company. These deals typically happen at a discount to the existing market value of the companies.
Sinha said through the fund, investors are expected to buy into an asset at an about 15% discount to its present value.
“Secondaries is the fastest growing asset class right now…the Indian ecosystem has been maturing but creating liquidity in the private market has been the biggest concern of this industry. Public markets only provide one route of exits…and that is also towards the very late stages,” he said.
The Oister Tribe Ace fund would make investments prior to a company’s IPO, with the public offering being the opportunity to exit for these investments.
“There’s always a possibility of an M&A but in India that’s more of a growing and emerging part, which may or may not happen because of the regulatory regime,” Tribe Capital’s Sethi said.
On the ongoing boom in public markets where companies are looking at listing over raising capital from private markets in the hunt for better valuations, Sethi said: “Prices typically boil over at some point and you should be careful to not overpay for an asset…it’s about what’s a good value for an investment, how you partner with the companies and how you think about them in the long term”.
“So, price is what you pay and value is what you get. The goal here is to enable and empower founders through us investing into them…and enable other folks in the company who have been around for a very long time by providing them with liquidity, and help all the people who want to invest in the ecosystem – from retail, wealth management and institutions that want to partner with us,” he added.
