The proliferation of funds focusing on Europe in terms of size, strategy and asset class will present more opportunities for secondaries buyers, according to Blackstone’s global head of secondaries.
“You’ve seen lots of funds focused on Europe: large buyout funds, niche strategies,” Verdun Perry, global head of the firm’s Strategic Partners unit, said at the IPEM conference in Cannes on Tuesday. “The horizontal expansion of product offerings within private equity and alts focused on Europe is exciting.”
“For me, selfishly, that means more dealflow for secondaries in the future,” he added. “What it really means is more product offerings for LPs and investors in the future.”
Fundraising for vehicles focusing on Europe raised $21.9 billion in the first half of this year, a 27 percent drop from the $29.8 billion raised in the same period the prior year, according to PEI data.
The region accounted for 22 percent of secondaries deal volume between January and June – a slight increase on the 20 percent registered during the same period last year.
In 2020, Strategic Partners hired Nik Morandi from CPP Investments to help lead its European secondaries business from London.
The secondaries market is still in its early innings, Perry said. He highlighted that when Strategic Partners was founded, global secondaries deal volume was $1.4 billion – a figure that grew to $130 billion last year.
“That’s not just strong growth, that’s exponential growth. I would argue we’re still in the very early days of growth – not just in private equity but the secondary market.”
On continuation funds – an area that has been criticised by some as contributing to the notion of private equity as a pyramid scheme – Perry said that most sponsors would have regrets over parting ways with some of their prized assets.
“If you were to survey all the GPs in the world… I would argue that 90 percent-plus would say, ‘Yes, I’ve sold something over the last five years [that] I should not have sold,'” he said. “‘I added a tonne of value, I sold it to a competitor, they reaped the benefits.’ This is a way for these GPs to hold onto their great assets longer and reap the benefits for the benefit of their LPs.
Strategic Partners is seeking $13.5 billion for its latest vehicle, Strategic Partners Fund IX. Blackstone president and chief operating officer Jon Gray said in an earnings call in January the fund was on track to raise as much as $20 billion.
Fund IX had raised $14 billion as of April, bringing it level with Ardian and Lexington Partners’ most recent flagship funds as the largest secondaries vehicles yet raised.
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