Deal focus: TR leads $150m multi-asset secondary for India's Samara

“For India in particular, there are two ways to generate returns as a secondary investor. You can buy average quality companies at steep discounts – we don’t like to do this because they are difficult to exit – or you can focus on high-quality companies where you see a clear path to exit in 3-5 years,” said Paul Robine, founder and CEO of TR.

“At the same time, you want to pick up companies that are leaders in their sectors because there is a greater chance of exit. Valuations are still relatively high on the private side in India, you need to be super-selective, and that’s what we have done there.”

Samara closed its second fund on USD 210m in 2014 and the vehicle is due to reach the end of its life in July 2024. A handful of assets remain, some of them already listed. TR short-selected three that were still under private ownership and where it saw sufficient upside. Axiom Asia, Stepstone Group, and Unigestion came in as co-investors.

The three companies are: Sahajanand Medical Technologies, a manufacturer of minimally invasive cardiovascular devices and India’s leading supplier of stents; FirstMeridian Business Services, which claims to be the country’s third-largest staffing company and primarily works in IT outsourcing; and Paradise Food Court, a biryani restaurant chain with 80-plus outlets across 10 cities.

FirstMeridian filed for an IPO in May 2022 and received regulatory approval in November for an offering of up to INR 8bn (USD 97.2m), including INR 7.5bn in shares held by the promoters and existing investors.

Robine noted that the continuation fund represents a typical TR deal in that the firm is participating as “an active secondary player” and has “negotiated a lot of rights.” He added that Sapphire proved a rewarding experience and TR has a good relationship with Samara, but these are “two very different transactions with very different dynamics.”

For Samara, the transaction is expected to propel distributions to paid-in (DPI) on Fund II towards 2x and give impetus for Fund III. A source close to the situation said the firm is currently talking to investors but added that raising primary capital is “not straightforward.” The secondary deal did not include follow-on capital and all existing LPs are said to have exited their positions.

The INR 11.5bn Sapphire transaction was one of a handful of single-asset continuation deals completed in Asia in 2021 and 2022. It was split equally between primary and secondary capital: Creador contributed the former and TR and NewQuest Capital Partners provided the latter. Sapphire currently trades at a 12% premium to its IPO price with a market capitalization of INR 85.6bn.

The recent multi-asset continuation deal is one of the largest of its kind completed in India in the past 10 years. Robine expects the country to account for about one-third of TR’s latest fund – in line with the previous fund. He is also bullish on the prospects for Southeast Asia and cautiously optimistic about China, noting that there are encouraging signs but it is too early to make assessments.

The firm continues to explore direct investment and fund restructuring opportunities. Direct deals tend to fall in the USD 30m-USD 100m range, while fund solutions can be USD 150m-USD 300m. “We are seeing more fund restructurings, portfolios of several assets, and deal sizes are increasing,” Robine said. “We are looking to lead transactions and bring in co-investors.”

UBS served as the exclusive advisor to Samara on the transaction.

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• Topics
• Secondaries
• South Asia
• Technology
• Healthcare
• India
• Samara Capital
• TR Capital
• Axiom Asia Private Capital
• Unigestion
• Stepstone
• Secondaries