Energy funds experienced the biggest drop in pricing this year amid a fall across all strategies, according to a pricing report by advisory firm Setter Capital.
Average high bids for stakes in energy funds fell almost 20 percent in the 90 days to the end of April, compared with the same period a year earlier, according to Toronto-based Setter’s Price Report April 2016. Buyers were willing to pay as much as 76.6 percent of net asset value during the period, compared with 95.6 percent the previous year.
Energy secondaries have been a hot topic so far this year, with market participants reporting increasing interest in the strategy and GP-led restructurings including First Reserve’s attempt to run processes on two of its energy-related funds.
Bidders were pricing more conservatively based on their expectations of future NAVs, Setter’s managing director Peter McGrath told Secondaries Investor.
“Buyers still have a strong appetite to transact, but they set the prices where they see they’re going to get a fair return and they had to price at more of a discount to achieve the returns,” McGrath said, adding that there was still strong buy-side demand.
Venture capital funds had the second-biggest drop, attracting bids of 75.8 percent of NAV, a 16 percent decrease, followed by distress-credit which had a 10.4 percent fall.
Bids for stakes in secondaries funds themselves fell by 8.1 percent to 84.2 percent of NAV.
Growth strategies experienced the smallest decrease with average high bids of 91.6 percent of NAV, a 3.2 percent drop.
In absolute terms, mezzanine and infrastructure funds both attracted the highest bids, with 93.3 percent and 93 percent of NAV respectively, according to the report.
Setter based its data on over 2,000 funds that it priced in 2015 from more than 1,300 institutional buyers.
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