Deutsche's Jason Sambanju launches secondaries firm

Prior to joining Deutsche in 2014, Sambanju spent seven years at Paul Capital, latterly as managing director and co-head of Asia. He was instrumental in the creation of NewQuest Capital Partners by Bank of America Merrill Lynch’s (BAML) Asia PE team in 2011. Paul Capital was one of four secondary investors that participated in a $400 million fund primarily used to acquire the existing BAML portfolio.

Since then the Asian secondaries market has gradually gathered pace, with transactions involving fund restructurings, single LP positions, and portfolios of direct interests in companies increasingly available. The unifying factor is liquidity: a generation of funds across Asia is nearing the end of its life and GPs are under pressure to return capital to LPs, which has made them more receptive to secondary options.

“It is more than 10 years since fundraising at the primary level showed noticeable increases and the secondary market is a function of the primary market. In recent years there has been a pretty noticeable shift in terms of the volume and quality of deal flow in Asian secondaries, and I expect the number of transactions to increase,” Sambanju told AVCJ.

Foundation Private Equity will operate as a classic secondary platform – as opposed to a direct investor – working with managers in need of liquidity solutions. This could mean taking out LPs on an individual basis that want to exit funds or participating in wholesale restructurings where the entire portfolio is spun off into a new vehicle and fresh capital is provided to support investee companies.

Activity in the secondaries market so far this year has largely focused on the venture capital space. A consortium led by HarbourVest Partners recently purchased $600 million worth of LP stakes from IDG Capital in at least seven funds managed by IDG affiliates in India and Vietnam as well as by the GP itself in China. IDG Capital acquired these holdings as part of the purchase of International Data Group.

It follows a $180 million sale by Sequoia Capital India of stakes in eight portfolio companies to Madison India Capital, which was supported by Lexington Capital. The purpose of the deal was to allow Sequoia to return capital to LPs in several of its more mature funds.

Some of the best-known secondary deals in Asia are restructurings of funds controlled by US firms that had decided to withdraw from the region. India alone has seen three in the last two-and-a-half years, with Canaan Partners, Draper Fisher Jurvetson and a joint venture between KPCB and Sherpalo Ventures all completing sales.

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