Commentary

Leerink Capital Partners recently raised a new $192 million fund along with Revelation Partners to invest in direct secondaries in healthcare companies. Scott Halsted, managing director at Revelation, explains the strategy and the current environment for healthcare secondaries investments.

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.

With strong deal flow and high pricing expectations, demand for direct secondaries is robust, but the market also tends to reflect a disconnect to the fundamentals, according to Hans Swildens, chief executive and founder of Industry Ventures.

Secondaries buyers and sellers are waiting for more clarity on the impact of the fall in oil prices on energy-focused funds, but opportunities remain in some pockets of the market.

With only few active buyers, the secondary market for timberland fund stakes remains quite illiquid compared to other asset classes, creating inefficiencies and offering attractive discounts to net asset value, says Thomas Goodrich, a partner with Stafford Capital Partners.

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.

Environmental, social and governance issues increasingly prevent LPs from committing to a specific fund, but might they also cause an uptick in secondaries deal flow?