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Alternative Market Briefing

Global secondary market now almost five times larger than in 2008

Thursday, August 13, 2020

Laxman Pai, Opalesque Asia:

Robust fundraising and healthy demand from investors make the secondary market a bright spot for private equity in H1 2020.

The global secondary market is now almost five times larger than in 2008, with $280bn in total assets under management (AUM) as of December 2019. As of December 2008, the industry held $55bn in AUM, said Preqin.

According to the report, in the first half of 2020, secondaries funds raised $44bn in total, including $19bn for Ardian ASF VIII, the largest secondaries fund ever closed. 11 secondaries funds closed raising a combined $44bn. The three largest secondaries funds closed secured $36bn in aggregate capital, 81% of the total amount raised.

These funds will face fierce competition for opportunities - there is now $125bn of dry powder in the sector, which may buoy NAV for those looking to sell their fund stakes. The average size of secondaries funds closed in H1 2020 reached $4bn.

As of June 2020, there are 73 secondaries funds in the market seeking a combined $69bn. Eighteen are Europe-focused funds, up from 10 a year prior, while the number of Asia-focused vehicles has risen from three to eight in the same period. Thirty-seven of the funds in the market target North America.

Demand among investors remains strong, and with 73 funds currently in the market seeking a combined $69bn, it seems likely that more capital will flow into secondaries funds in the second half of the year.

By median net IRR,......................

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