Funds of funds were the most active secondaries market sellers during the second half of 2014, according to a report from London-based private equity advisor Elm Capital.
Funds of funds made up 37 percent of the firm’s seller base during the period, compared to 27 percent in the second half of 2013.
Funds of funds have target returns for each fund in their portfolio and will consider selling if a buyer has significantly higher return expectations, the report explained. This is often the case if a fund of funds doesn’t anticipate committing to a GP’s successor fund or the next fund generation.
Family offices were the second most active sellers during the period, making up 22 percent of Elm’s seller base during the second half of 2014, down from 40 percent in 2013. Family offices continue to sell on the secondaries market because they are moving away from fund investments in order to make direct investments or co-investments in companies, the report revealed.
Asset managers followed, accounting for 15 percent of the seller base in 2014, up from 2 percent in 2013.
Source: Elm Capital