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Indian VC and PE funds look beyond fees to build equity value, says Fundamentum's Ashish Kumar

Fundamentum Partnership co-founder Ashish Kumar expects four to five Indian fund managers to attempt listing or platform equity models within three years.

By KaroStartup News Engine

At least four or five Indian venture capital and private equity firms are expected to attempt building listed asset management platforms within the next two to three years, according to Ashish Kumar, co-founder of Fundamentum Partnership and F2A. The move represents a shift from the industry's traditional revenue model of management fees and profit share towards creating long-term equity value in fund management entities themselves.

Speaking about the shifting dynamics in Indian private capital, Kumar said that while most domestic investment firms are still evaluating the idea and have not formalised concrete plans, public markets have begun valuing asset management businesses differently. The goal for managers pursuing this model is to hold high-performing companies for longer stretches and eventually float shares of the fund management business on public exchanges.

For its part, F2A is concentrating on deploying its recently raised fund. The firm increased its maiden fund target to Rs 3,500 crore ($370 million) from an earlier target of Rs 3,000 crore, boosted by strong domestic investor appetite that secured a Rs 2,500-crore local allocation. Kumar noted that any potential listing for F2A remains far off and is not currently under consideration.

Why fund managers want equity value beyond fees and carry

Traditional private capital firms generate income through two principal channels: annual management fees charged on assets under management and carried interest, which represents a share of profits generated upon exiting investments. Kumar identified three distinct factors prompting fund managers to consider building multi-vehicle investment platforms that carry independent equity value.

First, public capital markets have demonstrated a willingness to assign substantial equity valuations to asset management companies itself, creating a third wealth-creation mechanism for fund founders alongside fees and carry.

Second, modern technology companies operate on longer expansion horizons than traditional private equity investment cycles. Typical private equity funds hold portfolio companies for five to six years, while venture capital funds run on fixed multi-year fund cycles. However, successful tech companies frequently sustain expansion across 15 to 25 years. This duration mismatch makes it difficult for traditional single-fund structures to capture the full valuation upside of top-performing portfolio assets.

Third, limited partners (LPs) are increasingly expressing a preference to stay invested in winning assets rather than repeatedly reallocating capital into new funds every five, eight, or 10 years. Sophisticated LPs want fund managers to maintain exposure to high-performing assets through structured vehicles such as continuation funds, rather than forcing exits simply because a specific fund's lifecycle has ended.

Global precedents and India's early movers

Publicly traded alternative asset management firms are an established feature of Western financial markets. Major US private equity firms began listing on public exchanges nearly two decades ago, creating massive publicly traded asset management platforms.

In India, public listings of pure-play private equity and alternative asset management platforms remain rare, though the market recorded a major landmark recently when Gaja Capital listed on public exchanges.

Institutional longevity and succession in Indian venture capital

Building an enduring platform also addresses structural vulnerability within the Indian venture capital industry. According to an internal study conducted by F2A, roughly 300 of the approximately 400 private capital funds currently operating in India were established within the last five years.

Kumar highlighted that founder succession remains a critical challenge across the venture capital landscape, where firms are frequently tied to the identity and reputation of individual founding partners. Most venture funds dissolve once their original founders step back or retire.

Structuring fund management firms as permanent, equity-backed platforms allows managers to build institutions designed to survive beyond their founders. Kumar noted that entrepreneur-led investment firms may hold an advantage over professionally managed funds in making this transition, as former founders naturally approach firm-building with long-term enterprise value in mind rather than focusing strictly on individual fund economics.

What happens next for Indian fund managers

While the concept of listed platform equity is gaining traction among Indian fund managers, widespread adoption will depend on how early attempts perform over the coming two to three years. Managers seeking to follow this path will need to balance the operational requirements of managing public disclosures and quarterly investor expectations against the long horizons required for private equity and venture capital investing.

For now, F2A remains focused on putting its Rs 3,500 crore ($370 million) fund to work across Indian private markets, while broader industry participants observe whether alternative asset management listings become a standard exit pathway for fund founders in India.