This year is shaping up to be another record year for private equity secondary market activity, globally. Already, worldwide secondary market transactions for the first six months of 2019 has been estimated at nearly 900 transactions, worth some $46 billion.
And the market is expected to continue growing, said Jeff Akers, Partner and Head of Secondary Investments at Adams Street Partners, a private markets investment firm. “The largest driver continues to be the increased acceptance of the private equity secondary market as a portfolio management tool,” Akers told DealStreetAsia.
“With average market prices in the mid to high 90s for buyout funds, primary fundraising growth over the last 5-7 years, and LPs looking to actively manage their portfolios, the ingredients are all there for continued secondary market growth. This has only been enhanced in recent years by growth in the GP-led market, which now accounts for nearly a third of the total market volume.”
Adams Street, which has $40 billion in assets under management, has been investing in secondary transactions for 33 years. In their observation, North America, as the world’s most mature private equity market, continues to be the largest source of deal flow in the market. At the same time, the type of transactions that have seen the most active growth has been GP-led.
“GPs are organising secondary transactions late in a fund’s life to allow investors a liquidity option, and to extend the life of assets they deem to need additional time to maximize value,” Akers said.