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Half of LPs believe secondaries are “overvalued”

Roughly 54 percent of LPs believe current secondaries valuations are too high, according to a report from SEI.

About half of limited partners and other investors think the secondaries market is currently “overvalued,” according to a survey conducted by asset and wealth management firm SEI.

Jim Cass
Jim Cass

“This is a pretty good reflection of the market,” said Jim Cass, a senior vice president and managing director in the investment manager services group at SEI. “Supply and demand have a lot to do with why investors think it’s overvalued.”

Meanwhile, only 32 percent of consultants and 28 percent of fund managers think valuations are too high. The majority of both groups think valuations are fair, which could be a result of their work with the brokerage community, Cass explained.

“Many GPs utilise brokers to gain additional perspective on valuations in the secondary market,” he said.

Only 38 percent of LPs think secondaries prices are “fairly valued.”

An overwhelming majority of respondents did agree that the fairness of valuation processes “depends on the assets and parties involved.” An average of 7 percent of respondents, across all three parties, think processes are “generally fair and accurate”.

Source: SEI