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Alternative Market Briefing

The secondaries market shows signs of a rebound

Monday, March 01, 2021

Bailey McCann, Opalesque New York:

77% of secondaries fund managers expect to see a strong resurgence of deal flow over the next 12 months, according to a new survey from Investec. Respondents noted that while the pandemic has lasted longer than many anticipated, transaction volume has returned.

GP-led solutions have proved particularly resilient, with more than two-thirds (69%) anticipating further growth in this area and just 3% expecting activity to decrease. This finding is notable as a significant portion of secondaries activity is in the GP-led space. Recent research from investment bank Evercore suggests that terms are getting better for sellers as more buyers are under pressure to do deals.

That pressure appears to be accelerating another trend - the rise of single asset deals. Two-thirds of respondents said that they would consider deals with only one asset. Single asset deals have also grown in the LP portfolio space as well. 68% said they would consider deals representing only a single LP position.

With both GPs and LPs tailoring their secondaries offerings, it should come as no surprise that tail-end portfolio deals have fallen out of favor. Managers that participate in tail-end portfolios have begun to step away from this area the report notes, with 19% saying they expect activity to decrease or stop entirely. For buyers that do transact in this part of the market, they can get steep discounts - 63% of buyers report requiring a discount of 30% or ......................

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