Aberdeen Standard: LPs are selling Asia positions within global portfolios

Secondaries in the region is 'alive and well', according to executives at the UK's largest asset manager.

Asia has been a booming market for secondaries deals with deal volume in the region nearly doubling to account for 14 percent of the global total in the first half of this year, according to Greenhill Cogent.

“Secondaries is very much alive and well and I see that continuing,” Graham McDonald, global head of private equity at Aberdeen Standard Investments, told sister publication Private Equity International. The strategy is being used more extensively by limited partners to concentrate general relationships and manage fund terms, he added.

Compared with 15 years ago where participating in a secondaries sale was seen as a distressed move, McDonald said “it’s now accepted practice” in terms of how LPs and GPs manage their portfolios.

He cautioned that returns will compress amid an increasingly active deal environment.

Wen Tan, co-head of Asia private equity at Aberdeen Standard, added secondaries in the region has been “an evolution in the last five years” and characterised 2018 as an extremely busy year in terms of dealflow.

“We see a shift to global portfolios – LPs selling off Asia positions within a global portfolio of 15 or 20 funds – as well as fund restructurings and stapled deals,” Tan said. Amid high pricing for second-hand stakes, the firm continues to find pockets of value in lesser known funds, Tan said in September 2017.

Aberdeen Standard was formed in August last year with the merger of UK insurer Standard Life and Aberdeen Asset Management. Its private equity secondaries team capabilities comprise SL Capital Partners’ secondary opportunity funds that raised a combined $909 million and Aberdeen’s secondaries team, which invests through separately managed accounts.