Blue-chip managers using the secondaries market to restructure existing funds is one of three reasons why the secondaries market is generally balanced, according to Coller Capital‘s Jeremy Coller.
“A major restructuring of existing private equity funds is under way,” the firm’s founder and chief investment officer wrote in its latest Annual Report and Financial Statements dated 11 July. With record levels of deal volume and secondaries evolving and diversifying across asset classes, geographies and transaction types, the market is broadly in balance, Coller wrote.
“Although the market is undoubtedly very competitive, Coller does not see it as overheating,” he noted.
Coller Capital is confident about investing capital amid high levels of political and economic uncertainty, Coller noted. US political discourse is “as divisive internationally as it is internally” and trade tensions may not be resolved benignly. The firm has a careful eye on the downside cases of its investments and the diversification of its funds overall, he wrote.
With around $77 billion in dry powder as of the start of the year, there is around one-and-a-half years of buying power at 2017 transaction levels, broadly in line with recent norms, Coller added.
Coller Capital’s net profit for the year ended 31 March fell 15 percent from a year earlier to £2.9 million ($3.8 million; €3.3 million). Revenue rose 2 percent to £76.6 million.
Well-known GPs including Warburg Pincus, Nordic Capital and EQT have used strip sales, restructurings or stapled deals on their existing funds in the last 12 months. In April, Coller and Goldman Sachs Asset Management closed a €2.5 billion deal to restructure nine assets held in Nordic’s 2008-vintage fund.
Providence Equity Partners and TPG are the latest firms to tap the secondaries market, the latter working with advisory firm Lazard to explore a stapled tender offer on its 2008-vintage and 2013-vintage Asia-focused funds, as Secondaries Investor reported on Wednesday.
The firm is seeking $9 billion for its Coller International Partners VIII fund, which launched in the first half of the year, according to PEI data.