Oister Global, Tribe Capital partner to launch $500 million India-focused secondary fund

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Oister Global, a homegrown investment firm, has partnered with Tribe Capital India, the Indian arm of Silicon Valley-based Tribe Capital, to launch an Alternative Investment Fund (AIF) dedicated to secondary market transactions in India, the companies said in a joint release on September 23.

The newly launched fund — Oister Tribe Ace Fund — aims to invest $500 million across startup deals over the next two years, reflecting the growing momentum in India's secondary transaction market, as private equity and venture capital firms increasingly look at partial exits.

"The Indian private equity and venture capital sectors are ripe for secondaries, with increasing numbers of investors seeking to monetise their positions,” Tribe Capital India co-founder Raj Snehil Juneja said.

A secondary fund buys shares in a company from an existing backer. Unlike primary fundraise, where fresh capital is injected, secondary transactions involve the transfer of ownership between investors, leaving the company’s cash reserves untouched. Shares in these private companies are often available at a discount, sometimes as high as 40 percent, offering new investors a lucrative entry point.

In the first half of 2024, 62 percent of startup deals valued between $50 and 500 million were secondary transactions or buyouts. “As companies with strong unit economics prepare for potential IPOs, we expect demand for secondaries to soar,” Juneja said.

The launch comes amid a wave of initial public offerings (IPOs) by tech firms and an increase in large secondary share sales. Many investors are seeking partial exits from portfolio companies as valuations rise.

The value of exits from secondary transactions in India grew from $700 million in 2022 to $1 billion in 2023, Bain and IVCA's 2024 India Venture Capital Report said.

Globally, the secondaries market is estimated at over $130 billion, while India's is still at an early stage.

Also read: Secondary funds bloom as venture capital investors seek more exit options

Well-known startups such as Lenskart, Innovaccer, BharatPe, ShareChat, Shadowfax, Swiggy and Meesho have been active in the secondary market.

Recently, Urban Company saw a Rs 400 crore transaction and investors exited Purplle through a Rs 600-700 crore round.

Secondaries would be the tipping point for qualified investors to enter private markets, just as IPOs revolutionised access to public markets, Oister Global co-CEO Sandeep Sinha said. "We are excited to partner with Tribe Capital India, whose quant-driven investment approach and data expertise perfectly complement Oister's deep local knowledge and on-ground network," he said.

The Oister Tribe Ace Fund is Tribe Capital’s first India-focused secondary fund. It will operate under Tribe Capital Management India, an independent entity run by Arjun Sethi, Shiprocket co-founder Vishesh Khurana and Juneja from their Gurugram office.

The India fund will be managed independently from Tribe Capital US and would have no involvement in its daily operations.

The fund has taken a unique approach by selecting companies first and then raising funds from limited partners (LPs) based on specific needs. This contrasts with the more traditional method of raising a large fund upfront to be deployed across startups later.

The approach is aimed at providing more transparency to investors, Sinha said.

The team has already selected four companies across financial services, marketplaces and tech-first ventures to invest an initial $50 million tranche over the next 50-60 days, Sinha said without sharing the names.

A feeder fund, too, is being established at GIFT City to attract global investors, eventually channelling capital into the India AIF.

Commitments have come from domestic investors, including family offices and high-net-worth individuals (HNIs), with Oister Global, which invests in private funds like Blume Ventures and Stride, also contributing capital from its balance sheet.

Sethi said 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," he said.

Tribe Capital, through its global funds, has backed startups such as logistics aggregator Shiprocket, trucking platform BlackBuck, fintech SaaS firm Khatabook, savings app Jar, healthcare app Clinically, HR tech platform HireSure and web3 startup Questbook.

The secondary transaction market has attracted several players. Indian funds like Eqip Capital closed a $225 million fund last year, while TPG NewQuest and 360 ONE Asset Management, formerly IIFL Asset Management, recently launched a Rs 4,000-crore ($480.2 million) secondary fund.

An emerging trend is professionals leaving top VC firms to set up secondary funds. Notable exits include Raj Dugar, co-founder of WestBridge, and Nitin Agarwal, managing partner at Eight Roads Ventures. Others like Piyush Gupta, MD at Peak XV, and Sameer Brij Verma, MD at Nexus Venture Partners, have also quit to pursue similar ventures.