LC Ideas: Views & Insights
LC Nueva Momentum Fund Harnesses Growth in India's Thriving Secondaries Market
LC Nueva Momentum Fund* is LC Nueva Investment Partners' second Venture Equity fund following from their first INR 350Cr ($42M) LC Nueva Fund.
The fund focuses on a three-pronged investment strategy that reinvests into existing profitable portfolio companies, adjacent opportunities, and the secondary market.
LC Nueva Investment Partners, a partnership between Singapore’s Lighthouse Canton and Delhi-based Nueva Capital announced the launch of the LC Nueva Momentum Fund earlier in June. The Fund builds on the success of its predecessor, LC Nueva Fund which closed at INR 350Cr (~US$ 42M) earlier in 2023. The fund reported strong performances since its close, with over half the companies securing up rounds and reporting a ~57% CAGR in average revenue. The new LC Nueva Momentum Fund focuses on investing in 10-15 high-growth companies at the Series A/B and growth stages. The target size of the new fund is INR. 150Cr (~US$ 18M), with a green shoe option of INR. 100Cr (US$ 12M).
The fund’s strategic focus on winners from LC Nueva Fund, adjacent opportunities, and secondary market transactions positions it to capitalize on a unique moment in the market. Despite a slowdown in global Venture capital(VC) funding, India retained its position as the second-largest destination for VC and growth funding in the Asia-Pacific region. Notably, the secondary market has seen significant growth, driven by declining valuations and a pressing need for liquidity. Over the past five years, private secondary transactions have facilitated approximately US$7.7 billion in exits, in some cases surpassing the volume of IPOs and block trades. In addition to institutional investors, high-net-worth individuals (HNIs) are increasingly participating in these transactions, though typically on a smaller scale.
Sohil Chand, Founding Partner and CIO of LC Nueva Fund stated, "We are confident that our strategic focus on high-potential investments will position the LC Nueva Momentum Fund to achieve exceptional returns. By actively pursuing secondary opportunities alongside leveraging the strong relationships established through our previous fund, we are poised to navigate the current market dynamics effectively. We believe that this unique blend of strategies will not only solidify our portfolio's strength but also align with our long-term conviction in these strategies. “
“Globally, secondary funds experienced the fastest growth of any asset class in 2023,” noted Sanket Sinha, Global Head of Asset Management at Lighthouse Canton. “In India, we have recently seen a significant rise in portfolio secondaries, where funds acquire entire GP (General Partner) portfolios. These transactions were once limited, but as companies mature, the trend of institutional secondary investors purchasing private secondary portfolios is accelerating rapidly. In the first half of 2024 alone, secondary stake sales were prominent, making up 34% of transactions in the $50-500 million range for large deals.”
LC Nueva Momentum Fund focuses on investing in companies that have demonstrated improved operating performance and have become high-conviction investments within the LC Nueva Fund portfolio. By building on these proven successes, the fund aims to create a stable foundation for sustained growth while reducing investment risk. It also leverages the relationships and insights gained from its existing investments to secure favorable deals, ensuring alignment with emerging market trends. In the current investment climate, where liquidity needs and strategic rebalancing are driving secondary market transactions, the fund’s emphasis on acquiring these attractively priced assets is both timely and strategic.
Learn more about LC Nueva Momentum Fund here.
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* The registered name of the scheme is LC Nueva Momentum Fund 1
