PE secondaries volume cut by more than half in H1 - survey

Private equity fund secondaries – therefore excluding direct deals – were down by 60.4% ($10.11bn in H1 2020 versus $25.51bn in H1 2019). The segment of the market that was hit hardest was private debt fund secondaries, with $401m transacted – an 81.8% year-on-year drop. LBO fund secondaries fared better with a 55.0% decrease from H1 2019's $19.18bn. With $670m transacted, VC fund secondaries were down 68.6%.

A majority of buy-side respondents (60%) felt that more deals fell apart in H1 2020 compared to last year, mostly due to sellers walking away (46%) and adverse economic issues (35%). Most  respondents (71%) felt that competition was similar to H1 2019, but more than a quarter (27.5%) said it was lower, as many buyers pulled back at the onset of the Covid-19 outbreak.

Pension funds and primary GPs were the most active sellers in H1, providing 33.2% and 27% of the transaction volume, respectively. This ties in with the fact that almost three quarters of respondents felt that meaningfully more GPs coordinated tender offers to their LPs or attempted to liquidate or restructure older funds in H1 compared with the similar period last year. Most respondents to the Setter survey expect pension funds to be the biggest sellers again in H2.

Most market participants Unquote has spoken to in recent weeks do not expect secondaries activity to pick up meaningfully until Q3 valuations are out, meaning an uptick in deal completions is unlikely until late in the year or even early 2021. This is mirrored in the report, with respondents predicting total volume for 2020 to be $58.30bn (including $50.26bn for PE secondaries alone), translating to a 31.7% drop from the $85.41bn transacted in 2019.

The Setter report polled 96 of the most active global buyers in the secondary market for alternative investments, and was conducted at the end of June 2020. Volume is defined as total exposure (NAV + unfunded in US dollars) purchased by the respondents, including binding agreements only.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Secondaries
• GPs
• LPs
• France
• UK / Ireland
• Benelux
• DACH
• Southern Europe
• Nordics
• CEE
• Secondaries
• Market Insight