Private Equity Secondaries: The Upcoming Protagonist in the PE Space

Investment Research

Private Equity (PE) has been a tried and tested approach to raising capital across every business lifecycle. Though, in contrast to our frenetic world, PEs mature, surely, but slowly. Here PE Secondaries one-up them. They offer liquidity, entry/exit options to otherwise closed funds, and faster route to rebalance portfolios, among other advantages. Though, Secondaries also come with their challenges. This white paper explores what Secondaries are. It makes a case for why they are gaining traction and outlines the opportunities and challenges they offer to prospective buyers and sellers.

Key Highlights:

  • Currently, the global NAV for PEs is almost thrice ($4.5tn at the end of 1H20) that of the public market capitalization. The growth in PEs shows what is in store for the Secondaries market, which should register at least similar – if not faster – growth.
  • Considering the market dynamics, overall PE deal volumes are slated to go northward in the long-term, implying a significant scope for PE secondaries to gain a larger foothold in the PE universe.
  • According to Evercore, most of the transactions were done by top players and the secondaries were top-heavy last year: buyers with funds of $5bn or more accounted for almost half of the total volumes.

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