Nearly a third of capital for purchases comes from debt, a survey of UK and European secondaries buyers suggests.
Respondents to the poll, conducted by Kline Hill Partners and Setter Capital in April, were asked for their views on how much of payments to seller at close were funded by debt, in terms of overall dollar volume. Just under half of the respondents said 30 percent, and about a third of respondents said 20 percent.
The estimates are in line with other reports including Evercore’s 2015 Secondary Market Survey, released in January, which found a quarter of deal volume last year was funded by leverage at the special purpose vehicle (SPV) level.
Some market participants have said that leverage levels can be much higher. In April, AlpInvest Partners’ Maarten Vervoort said some deals were funded by as much as 70 percent debt, and that this changes the nature of the investment especially if the underlying portfolio is also leveraged.
“It becomes a totally different type of investment, and you can argue to what extent it becomes an attractive investment,” he said.