Guest commentary

Merely trading LP positions won’t address deep problems of funds that haven’t raised new capital for at least eight years, explains Joncarlo Mark, founder of Upwelling Capital Group.

In an increasingly crowded transactions market, the competitive edge is shifting to buyers with efficient transaction processes. Fadi Samman, a partner in the investment management practice at law firm Akin Gump, offers his tips for what investors should consider.

With a degrading macro and a stock market plunge, investors may have to face some old daemons such as the denominator effect, which may reappear on CIOs’ agendas, explains Thomas Liaudet, a partner at Campbell Lutyens' secondary advisory team.

Whether for acquiring portfolios, ensuring the efficient use of investor equity, or for returning value to investors, secondaries participants are increasingly viewing debt as part of their strategic mix, explains Simon Hamilton, head of Investec Fund Finance.

The secondary market is now becoming well established. This represents a critical step in the evolution of the private equity market that will transform the way investors think about funds of funds, explains Benoit Verbrugghe, member of the executive committee and head of Ardian US.

Using leverage in private equity secondary transactions has its advantages but also raises issues around the form of security of such financings that both buyers and sellers should be aware of, explains Ted Craig, a partner with MJ Hudson in London.

Historic infrastructure performance suggests now is the time for increased infrastructure secondaries opportunities in Canada, writes Nigel Brindley, co-founder of investment advisory firm Stratus Infrastructure.

There are certain alternatives a company should consider in the 409A valuation process when permitting secondary sales, writes Ira Simkhovitch, a senior associate at Industry Ventures.

About 63 percent of investors surveyed by Investec are likely to use third-party debt for a secondaries acquisition in the future, explains global head of fund finance at Investec Simon Hamilton.

Leverage is not new to the secondary market, but it has become more prevalent and consequently LPs should keep an eye on the impact of its use, says Chason Beggerow, a partner at private equity advisory firm Altius Associates.