Secondary Fund (Continuation)

## What these funds do In private markets, money is locked up for years. Secondary funds exist to provide an exit before the asset is sold or listed. They buy existing positions — either limited partners' stakes in a private fund (LP secondaries) or specific portfolio companies a GP wants to hold longer (GP-led, or continuation funds). The seller gets cash now; the buyer takes over the position at a negotiated price, often a discount to the last marked value.

## The continuation vehicle A continuation fund is a specific, fast-growing structure. A private-equity or venture manager moves one or more prized portfolio companies out of an ageing fund (whose 10-year life is ending) into a new vehicle. Existing investors choose to cash out or roll over; new secondary investors put in fresh capital. The manager keeps running the asset it knows well, instead of being forced to sell into a weak market.

## Why this matters in India India's startup and PE ecosystem has matured to the point where exits are the central question. With IPO windows opening and shutting and strategic M&A uneven, secondaries have become a real liquidity route. Domestic and global secondary buyers are increasingly active in Indian VC/PE, and SEBI's AIF (Alternative Investment Fund) framework governs these vehicles, including disclosure and valuation rules tightened in recent years. Continuation funds let backers of, say, a profitable but not-yet-listable Indian SaaS or consumer company realise gains while the business keeps compounding.

## Things to weigh For LPs, secondaries offer earlier liquidity and diversification but usually at a discount. For continuation vehicles specifically, there is an inherent conflict of interest — the same manager sells and buys — so independent valuation, an LP advisory committee vote, and a fairness opinion matter a great deal. SEBI and global regulators now scrutinise GP-led deals precisely for this reason. The price you accept (or pay) versus true intrinsic value is everything.