Hunger for secondaries capital strong post-Ardian, Lexington closes

The 10 largest secondaries funds in market are targeting a combined $50.05bn, roughly equivalent to the record amount raised in H1 2020.

Secondaries funds are still chasing large amounts of capital on the back of the close of the two largest-ever secondaries vehicles this year.

The 10 largest secondaries funds in market are targeting at least $50.05 billion combined, according to Secondaries Investor data. This compares with $69.8 billion recorded on 1 July last year, before Ardian held a $19 billion final close on its eighth secondaries programme and Lexington Capital Partners IX completed fundraising on $14 billion.

Secondaries funds raised $52.4 billion in the first half of this year, exceeding all full-year totals on record. The figure includes Pantheon’s sixth dedicated vehicle which held its final close in June on $2.2 billion.

Of the top 10, HarbourVest Partners’ Dover Street X and Goldman Sachs Asset Management’s Vintage VIII have held interim closes on or around target, while Coller International Partners VIII and Hamilton Lane Secondary Fund V have passed their respective half-way points.

Secondaries Investor data includes real estate, infrastructure and credit. Whitehorse Liquidity Partners, a preferred equity specialist, is seeking $3 billion for its fourth fund, according to Secondaries Investor data.

According to Sunaina Sinha of placement agent and secondaries advisor Cebile Capital, covid-19 may have proved beneficial to secondaries fundraising.

“[The dislocations from covid] have forced LPs to think about how they are going to take advantage of the opportunity that has arisen,” Sinha told Secondaries Investor. “The secondaries market is an obvious allocation for them to either size up on or to start investing in. That’s why we have largely seen healthy fundraising statistics, albeit a bit delayed for some GPs given the logistics of fundraising via Zoom and Teams.”

According to investment bank Greenhill, the secondaries market has around $183 billion in dry powder including leverage, meaning there is around $2.90 for every $1 traded as a ratio to last-12-months deal volume.

The largest 15 buyers accounted for 75 percent of dry powder in the market as of June, according to Evercore.