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Cogent: mega secondaries deals dominated in 2014

Secondaries deal volume grew to $42bn in 2014 and was partly driven by transactions of $1bn or more.

Secondaries deal volume reached $42 billion in 2014, representing a 50 percent increase from 2013, according to a study from Cogent Partners.

The results are in line with Cogent’s prediction that secondaries market volume would experience double-digit growth in 2014.

The surge in volume was partly driven by large transactions. There were 12 transactions of $1 billion or more last year, which accounted for 39 percent of total market volume, compared to just 19 percent in 2013.

“2014 was characterised by numerous sizeable portfolios brought to market by opportunistic sellers looking to rebalance their private equity portfolios and take advantage of the strong pricing environment,” said managing director Todd Miller.

Limited partner portfolio sales accounted for roughly 75 percent, or $31 billion, of secondaries transactions last year, Cogent revealed. Non-traditional secondaries deals made up the remainder including GP-led transactions which made up 13 percent and ‘other’ deals such as direct secondaries and spin-outs, which represented 12 percent of total volume.

Cogent had initially predicted non-traditional secondaries transactions would comprise a third of market volume, but many of these types of secondaries deals ended up being smaller in nature.

Cogent’s estimate of $42 billion worth of secondaries deals is lower than Setter Capital’s estimate of $49 billion and NYPPEX’s $52 billion figure. While each firm used a different method to determine their volume estimate, they all agreed LP stakes still accounted for a majority of the market.

Source: Cogent Partners