Greenhill came out on top again in Secondaries Investor’s latest annual secondaries advisory survey in a field marked by growing transaction volume and increasingly diverse deal types.
The firm worked on $18.2 billion of deals across 82 separate transactions last year, a value increase of 53 percent on the year before. Others had similar levels of growth, with Park Hill Group advising on $12 billion across 32 transactions, equivalent to a 50 percent increase in value on the previous year.
Evercore advised on 71 deals worth $13.1 billion, compared with $10.1 billion the previous year. On GP-led deals the firm noted a “significant increase in the level of take-up from LPs and a high level of transactions involving new capital raises”, particularly for follow-on investments.
Greenhill, Park Hill and Evercore accounted for more than half of last year’s roughly $74 billion in deal volume among them.
Deal volume was defined as purchase price plus unfunded commitments for transactions that closed between January and December, and data was submitted by advisors.
A majority of the intermediaries that replied to the survey advised on at least one preferred equity deal in 2018. An approaching market correction may be a reason for the uptick, according to Thomas Liaudet, a partner with Campbell Lutyens.
“There is a general feel that we are nearing some sort of downturn,” Liaudet said. “Is there a bit of that coming into peoples’ minds in the sense that a structured deal also helps mitigate the downside risk for a buyer?”
Campbell Lutyens advised on 15 deals last year worth $8.3 billion in total, up from $6.9 billion the year before. Infrastructure accounted for 34 percent of its transactions by asset class, with its spin-out of John Hancock’s infrastructure investment team being one of the largest GP-led deals of last year.
Firms continued to work on an increasingly diverse range of asset classes. Eaton Partners advised on five deals worth $1.2 billion, 29 percent of which involved intellectual property assets. The firm, which helped spin out a team along with 75,000 music copyrights into a new GP/LP structure named Lyric Capital I, expects to see further asset diversification this year.
Sixpoint Partners, which advised on $300 million-worth of transactions – all of which were GP-led – saw a larger of volume of energy-focused deals and expects the bid/ask to narrow in this sector and facilitate more volume.
Credit Suisse closed nine transactions worth $3 billion across private equity, infrastructure and energy. This included the £790 million ($1.04 billion; €916 million) spin-out of Standard Chartered’s captive private equity team, a deal backed by ICG Strategic Equity.
Rede Partners nearly quadrupled its transaction volume last year, advising on €2 billion-worth of GP-led deals. Among these were two single-asset transactions, including the process on the 2007-vintage TDR Capital II and its remaining asset, Stonegate Pubs.
Mercury Capital Advisors advised on $800 million of deals, noting an uptick in the number of quality GPs looking to invest in complex secondaries processes, a view shared by Rede.
For Greenhill and Switzerland-based Axon Partners – which advised on €210 million-worth of transactions – LP positions comprised a vast majority of deal volume, 90 percent and 100 percent respectively. Park Hill said it had an even split.
Harken Capital Securities closed $550 million of transactions in 2018, including two GP-led venture capital deals worth $200 million. “Not bad for a boutique firm like ours,” said secondaries head Nick Hatch.