The most significant challenge in Indian private equity today is not necessarily a lack of quality assets, but increasing pressure around liquidity and exits. A capital overhang estimated by industry observers to exceed $100 billion remains tied up in funds from the 2015–2020 vintage, reflecting the growing strain on traditional exit mechanisms. As an investment banker specializing in the US-India corridor, I increasingly hear concerns from investors around delayed liquidity and extended holding periods. In this context, GP-led secondary transactions are emerging as an important area of discussion within the industry.

For years, the Indian private equity model has relied on two primary exit routes: IPOs and strategic sales. While the IPO market has remained relatively active, it may not be sufficient to accommodate the growing number of mature assets seeking exits. Strategic sales have also seen relatively slower momentum, accounting for approximately $1.1 billion in exits in the first half of 2024. This has resulted in several mature companies remaining within aging funds for longer durations.