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Jeremy Coller: Demand ‘noticeably higher’ for younger vintages

Buyers have become more selective, according to the eponymous firm's founder and chief investment officer.

Secondaries buyers are increasingly focusing on assets held in more recent funds, Coller Capital‘s founder and chief investment officer has said.

Demand is “noticeably higher” for younger vintages, Jeremy Coller noted in the firm’s latest Annual Report and Financial Statements, dated 20 July and for the year ending 31 March. He also noted that demand had increased for blue-chip GPs and for resilient sectors.

“Buyers have become more selective,” the veteran secondaries investor wrote.

The weighted average vintage of all funds sold in the first half of this year was 2013, according to data from investment bank Jefferies. Funds of 2016 or younger vintages priced at an average of 96 percent of net asset value, and the average high bid for stakes in buyout funds less than five years old in North America and Europe was a 1 percent premium to NAV.

In Greenhill’s mid-year report, the investment bank also noted a focus on newer vintages, and observed “very aggressive bidding behaviour” from large buyers wanting to acquire high-quality and newer vintage buyout fund portfolios.

Last week, Secondaries Investor reported that CPP Investments had backed a C$1 billion ($799 million; €703 million) process in which a strip of mid-market and growth assets from a BT Pension Scheme separately managed account managed by Hermes were moved into a continuation vehicle. The average weighted vintage of fund and co-investment stakes involved in the transaction was 2017.

The pandemic has created a wide range of issues and challenges for private equity investors and fund managers, Coller wrote in the report.

“Reshaping their portfolios and investment approaches for a post-pandemic world will likely be a priority, and many will turn to the secondary market for capital and solutions,” he said.

The secondaries market is expanding, particularly in Asia, and across asset classes such as real assets, infrastructure and private credit, Coller added.

Coller Capital’s net profit for the year ending 31 March rose 8.5 percent from a year earlier to £3.85 million ($5.2 million; €4.5 million). Revenue jumped 9.4 percent to £82.3 million.

London-headquartered Coller Capital, a pioneer of the secondaries market, is seeking  a buyer for a sale of its management company, Secondaries Investor reported in September. The firm was one of three independent pure-play secondaries firms in the SI 50 ranking; the others being Lexington Partners, which agreed to be acquired by Franklin Templeton this month, and Paris-headquartered Committed Advisors.

The firm’s eighth fund, Coller International Partners VIII, held its final close in January with $7.45 billion of LP commitments, the report noted.