Fund of funds stakes saw the strongest first-half volume growth amid notable increases all around, according to Setter Capital’s Volume Report H1 2017.
The volume of secondaries transactions involving fund of funds stakes increased 289.4 percent between the first half of 2016 and the first half of 2017, from $161 million to $627 million. Such deals accounted for 5 percent of all private equity secondaries in the first half of 2017, a period in which total deal volume increased 56.3 percent to $29.1 billion, according to the survey.
Other big increases were seen in energy secondaries transactions, which increased by 163.3 percent to $882 million year-on-year in the first half, and large buyout stakes, which hit $13.5 billion, an increase of 73.1 percent from the first half of 2016.
“Some of the dealflow was expected but the increase in fund of funds volumes was massive,” said Zia Rahman, an associate at Setter. “On the energy side we were seeing volatility all along, with buyers specifically requesting funds and a lot of sellers trying to get out.”
Looking ahead, 58 percent of respondents felt that the second half of 2017 will see similar volumes to the first, with 28 percent expecting a meaningful increase. Respondents predicted total volume for the 2017 fiscal year to be $55.7 billion, a 32.15 percent increase from the $42.2 billion seen in 2016.
Respondents were also upbeat about pricing, expecting on average that net asset value valuations will increase by 1.52 percent in the second half of 2017 compared to the first. This contrasts with the results of the first-half 2016 report, when a 4 percent decrease in NAV was predicted.
Setter surveyed 138 secondaries funds, pension funds, investment consultants and family offices for Volume Report H1 2017. Respondents include Pantheon, HarbourVest Partners, Partners Group and Hamilton Lane Advisors.