Deal volume could hit $52bn – survey

UK and European buyers who attended a recent exclusive secondaries dinner in London were also asked for their views on return multiples for deals in 2016.

Annual deal volume in the secondaries market could grow to as much as $52 billion, according to a recent survey by Kline Hill Partners and Setter Capital.

Respondents to the survey, conducted by Mike Bego-led Kline Hill for an exclusive secondaries dinner held in London in April, were asked for their high and low estimate of the range of annual deal volume for the next five years. The low estimate was $34 billion.

“10 years ago, some LPs viewed the secondaries market as possessing a stigma. Now every LP thinks about it regularly,” said a managing director at a New York-based advisory firm. “If the rule of thumb is circa 5 percent of LP interests transact on the secondaries market, now that number is heading to 10 percent and I think it’s going to continue to go up.”

The survey also asked respondents, mainly UK and Europe-based secondaries buyers, for their views on how secondaries deals closed by all firms this year would perform. Over half of respondents said gross returns on investment (ROI) will be 1.3x to 1.4x, excluding leverage.

About 10 percent said returns will be 1.2x, with 5 percent putting the figure at 1.7x or greater.

Screen Shot 2016-05-13 at 17.08.26







High and low estimate of annual secondaries deal volume for next five years

Screen Shot 2016-05-13 at 17.08.04







Respondents’ gross ROI (excluding leverage) estimates for secondaries deals in 2016


Source: Kline Hill Partners and Setter Capital