News & Analysis

High deal volume matches strong competition, Coller says

Jeremy Coller also expects transaction volume to be increasingly fuelled by more complex transactions such as GP-led restructurings, according to comments in a UK filing.

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Coller Capital sees strong competition in the secondaries market but also believes that it is being matched by high transaction volume, especially thanks to a rise in GP-led restructurings and other more complex transactions, according to a UK regulatory filing.

“Buoyant capital-raising and greater confidence in the world economy lifted secondaries pricing in the first half of 2014,” wrote Jeremy Coller in a 1 July note prefacing the firm’s strategic report for the year ended 31 March. The report was filed with Companies House on 2 September.

Since high pricing attracted a large number of sellers, the secondaries market set a new record in 2014 with about $41 billion in closed secondaries transactions. This high level of transactions brought supply and demand back into closer alignment and led to a softening of prices in the second half of the year, Coller wrote. He also thinks that the ratio of dry powder at the end of 2014 was comfortably within the norms of the last few years.

“We foresee these dynamics continuing, with strong competition being matched by high transaction volumes,” he wrote. “Coller Capital also expects a significant portion of these transactions to involve sellers with complex liquidity needs, a segment of the market in which the firm believes it has real strengths.”

Overall, the macro-economic picture is encouraging, wrote Coller. He explained that while the US economy continues to drive the global recovery, the picture in Europe is a little more mixed, Chinese growth is continuing to slow down and the long-term implications of the withdrawal of quantitative easing remain to be seen.

“Overall, our outlook is certainly positive, but we will continue to be alert to risks that might impact growth in global or national markets,” he concluded.

Coller Capital’s operating profit for the year 2015 ended 31 March was £2.09 million ($3.2 million, €2.8 million), down from £2.1 million for the previous year, while revenue increased to £47.2 million for 2015 from £45.1 million the previous year.