Secondaries market set for another record year – NYPPEX

Secondaries transaction volume is on course to smash last year’s record, figures from NYPPEX Private Markets suggest.

The volume of funds that changed hands in the first half of this year hit $36.1 billion against a total of $54.6 billion for all of 2018, according to research by the intermediary.

GP-led processes represented 34 percent of this total, around the same proportion they accounted for in full-year 2018.

The figure for the first half is up 38 percent on the $22.1 billion recorded in the same period of last year, Rye Brook-headquartered NYPPEX noted.

Direct secondaries volumes – the trading of stakes in private companies – reached $19.3 billion in the first six months of this year compared with $29.3 billion for the whole of 2018.

“If this pace continues, secondary private equity transaction volume [counting LP stakes and directs] will have its first $100 billion-plus year in 2019,” said NYPPEX managing partner Laurence Allen.

Approximately 53 percent of fund interests acquired on the secondaries market were in US private equity funds, 38 percent in European funds and 9 percent in Asian funds.

While bid indications for most private equity strategies increased by 1-2 percentage points on average, the number of bid indications for venture funds declined by 6.1 percentage points. This was due to uncertainty regarding the valuations of some unicorns, NYPPEX noted.

Funds of between 13 and 15 years of age generated an annual return of -0.24 percent, compared with 4.43 percent for those of seven to 12 years of age, an NYPPEX report published last year found. Investors can gain 12 percentage points in annual returns by selling funds older than 13 years and reinvesting in funds of six years or younger, it noted.