Evercore and Greenhill Cogent together worked on almost half of last year’s secondaries activity amid a shift toward increasing specialisation, Secondaries Investor‘s annual advisory survey has revealed.
The two investment banks worked on $8 billion of deals each, with Evercore advising on 36 deals and Greenhill advising on 57 transactions. Deal volume was defined as purchase price plus unfunded commitments for transactions that closed between January and December, and data was submitted by advisors.
Advisors’ work last year increasingly focused on specific types of deals and asset classes, according to the survey. Buyout funds accounted for 80 percent of Park Hill’s 20 deals, while infrastructure and energy strategies accounted for more than half of Campbell Lutyens’s 15 transactions.
Limited partnership portfolios accounted for the majority of deal types for most advisors – all of Mozaic Capital Advisors‘ deals, more than 80 percent of Cebile Capital’s, Elm Capital’s and Greenhill’s deals, and roughly two-thirds of Evercore’s and Park Hill’s transactions.
GP-led processes accounted for the majority of deal types for Campbell Lutyens, Credit Suisse and Rede Partners. London-based Rede had the highest proportion of such deals at 85 percent of its five transactions, and opportunity rather than necessity drove such processes last year, according to Yaron Zafir, the firm’s head of secondaries.
Average high pricing was not enough to tempt many LPs to part with portfolios larger than $1 billion, with advisors noting the drop in number of such sales. This was in part due to excess net liquidity, according to Thomas Liaudet, a partner at Campbell Lutyens.
Pricing also varied greatly across fund managers. London-based Elm, which advised on $1 billion of deals, closed a few transactions at significant discounts – as much as a 95 percent discount to net asset value in some cases – where investors had “lost faith in the GP”.
Cebile, which did not disclose its deal volume figure, said there was a large spread on bids received at the high end. “If a GP is of low quality, bids are generally clustered together,” said Sunaina Sinha, managing partner at Cebile, which worked on 17 deals. “For higher quality GPs, the highest bids are often well above the rest of the crowd.”
Credit Suisse, which advised on 15 deals, worked on a mix of asset classes including 10 percent of its deals for each of infrastructure, private debt and special situations. Real estate accounted for 5 percent.
Lazard, which reported its 15 deals in euros, was split evenly across LP and GP-led transactions, which included co-investment syndications and annex funds. GP-led deals have become a new normal across private equity, infrastructure and real estate, Lazard noted, adding it expects this trend to continue because of end-of-fund life pressures on GPs, among other drivers.
Mozaic and Rede, which both declined to disclose their deal volume figures, worked on the highest proportion of venture capital deals at 35 percent and 33 percent respectively.
Stay tuned for our law firm secondaries advisory survey in the coming week.