GP-leds inch closer to 50% of total secondaries deal volume – Greenhill

The secondaries market is edging closer to the milestone of being half made up of sponsor-led transactions, preliminary data from Greenhill show.

Total deal volume for last year was around $60 billion – roughly in line with 2017 levels – according to estimates from the investment bank’s full-year volume report, shared with Secondaries Investor. GP-led deals accounted for $26 billion (around 44 percent) of this figure – the highest level on record by proportion.

“The sheer number and associated volume of GP-led transactions…shows that such transactions have now become a mainstream liquidity pathway for GPs,” Bernhard Engelien, Greenhill’s co-head of European capital advisory, told Secondaries Investor. “This development is beneficial to both GPs and LPs, and will contribute to the long-term growth of the asset class.”

Greenhill estimates there were more than 100 sponsor-led transactions last year – the majority of which were completed during the second half of the year or which are still going.

The rise in GP-led deals buoyed overall secondaries transaction volumes during a year when many large LP portfolio sales failed to transact amid the pandemic. Sponsor-led transactions, which clocked the same in dollar terms as 2019, rose 14 percentage points as a proportion of total volume.

The last minute boost in GP-led deal volume in the second half of last year helped full-year secondaries bounce back from just $18 billion recorded in the first half.

Greenhill’s figure covers buyout, venture and growth, real estate, infra and private credit.

Headline sponsor-led deals that launched last year include Thomas H Lee Partners‘ single-asset process on its 2015-vintage Fund VII, Kinderhook Industries‘ restructuring of its 2009-vintage third fund, and Summit Partners‘ process on multiple existing funds, as Secondaries Investor has reported.

The secondaries market has evolved to a point where it is well-positioned to weather temporary storms, according to Engelien. “The strong rebound in volume in H2 2020 shows that the secondary market has been resilient and is now mature enough to overcome short-term setbacks.”

– Rod James contributed to this report.