Pricing was unaffected by volatility in H2 2015 – Elm Capital

Volatility in public markets did not affect affect pricing for private equity fund stake transactions Elm Capital advised on in the second half of last year, advisory firm Elm Capital stated in a report which analysed its own dealflow.

The median high bids for all fund types received by the firm remained at 98 percent of net asset value (NAV), according to its Private Equity Secondary Newsletter Second Half 2015 report.

Stakes in buyout funds traded at record high prices, with median high bids reaching par to NAV, a rise from 98 percent in the first half of the year. Most of the stakes that traded at par or at a premium were for large-cap US and European funds.

The Standard & Poor’s 500 index dropped 10 percent in one week during August, bouncing back to end the year at June 2015 levels without affecting pricing on private equity fund stakes, according to the report.

“This shows that in a volatile market, like we have seen in H2 2015, short-term public markets volatility has relatively little impact on the pricing of private equity funds,” the report argued.

The combination of distributions by private equity funds, strong demand from secondaries buyers and the availability of cheap credit continued to support high pricing.

The report was based on Elm’s daily activity and observations related to dealflow it received, and median high bids were calculated from the highest bid it received for each fund between 1 July and 31 December.

Source: Elm Capital. Click to enlarge.