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$42bn side hustle for private equity as secondary deals soar

Secondary deals have already broken 42bn for the first semester of 2019

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According to Setter Capital, a Toronto based investment bank, within the first half of 2019; private equity secondary market is up a third on last year at the same point.

Secondary deals

The PE secondary market is where previously issued equity is bought or sold and new investor commitments are made. PE investments are typically illiquid, making it often difficult to buy and sell positions in private equity investments.

In the past, if an investor wanted out of a fund early, they might not be asked to participate in future opportunities again.

In 2019 however this is not the case. Secondary deals are soaring, in 2018 the value of private equity secondary deals reached over 70bn. Mid-way through 2019 this total has already topped 42bn, which is more than the entire value in 4 of the previous 7 years.

Competitive market

Competition for the secondary market is increasing. There are around 45 secondary vehicles focused on private equity fundraising with a combined target of $72bn.

Secondary’s historically have outperformed most other private equity fund types.

Buyers estimate annualised IRR’s of around 15.1%. Outside of major private equity funds annualised IRR’s of 18.9% because deals are riskier.

AlternativeSoft is an award-winning quantitative analytics software specialising in asset selection, portfolio construction and customised reporting. To find out more or register for a free demo, get in touch with our team.


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