Energy and venture pricing fell further in H2

Volatility in public markets and macroeconomic uncertainty are making secondaries participants more cautious, which affects pricing.

Secondaries bids for energy funds slumped further in the second half of last year amid a drop in oil prices and buyer interest, according to a report by Harken Capital Securities.

Median bids for energy funds were the lowest out of all strategies, with between 61 percent and 76 percent of net asset value (NAV), according to the advisory and placement firm’s 2H 2015 Private Equity Secondaries Market Update. This is a drop from the first half of the year when buyers were willing to pay as much as 80 percent of NAV for stakes in the funds.

Venture funds attracted the second-lowest average bids, with between 71 percent and 85 percent of NAV.

Median bids for all types of funds received by the firm also dropped in the second half of the year to between 78 percent and 89 percent of NAV from 83 percent to 94 percent of NAV in the first half.

Volatility in public markets and uncertain macroeconomic and geopolitical conditions are driving pricing down, according to a source.

“People are generally a bit more cautious and that affects secondaries pricing,” the source told Secondaries Investor. “People are starting to see [pricing] coming off a little bit from the highs. It’s not surprising considering public markets are down and this will especially affect older funds that have more public exposure.”