Horsley Bridge Partners, a long-time venture fund of funds platform, is selling a portfolio of stakes in older funds that could total up to $1.5 billion, sources told affiliate title Buyouts.
The deal, considered a ‘tail-end’ secondaries process in that it involves older funds, is among a surge of LP-related secondaries sales helping to drive volume despite continuing pricing discrepancies. LP volume is said to be the main type of deal that buyers are interested in right now, along with select GP-led processes for top assets.
Horsley Bridge, based in California, is understood to be working on the portfolio sale with adviser Jefferies. The process will likely attract steep discounts from buyers because the funds involved are venture, which is garnering tough pricing.
Venture pricing last year stood around 68 percent of net asset value, with venture funds accounting for only 8 percent of total volume, according to Jefferies’ 2022 full-year volume report.
“Pricing declined 2,000 basis points from 2021, representing the largest annual drop for any strategy in history,” the report said. “With the Nasdaq down 33 percent in 2022, buyers had little confidence in relative asset values and showed limited demand for even the highest-quality GPs without 30 percent-plus discounts.”
As well, the portfolio comprises older funds that the fund of funds is looking to move as a process of cleaning up and delivering proceeds back to investors in those pools. Fund of funds secondaries is a specific type of process that usually attracts a group of specific buyers looking for such deals.
Last year, fund of fund tail-end sales to wind down older vehicles accounted for around 9 percent of the $56 billion of estimated total LP sales, according to Jefferies’ 2022 full-year volume report. Tail-end pricing (pre-2012 vintages) came in at an average of 70 percent of net asset value, Jefferies’ volume report said. “As expected, buyers showed greater demand for more recent vintages than tail-end funds,” the report said.
No one from Horsley Bridge responded to a comment request on Monday.
The firm launched in 1983 and is headquartered in San Francisco, with offices in London and Beijing. Its funds of funds target early stage venture, growth and small buyout, along with direct co-investments, according to its Form ADV.
The management company is owned by the managing directors, with no managing director owning more than 25 percent of the firm as of 31 December, the Firm ADV said. The firm managed about $24 billion as of the same date.
This article first appeared on affiliate title Buyouts
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