Largest secondaries funds are targeting 75% jump in size

The most recent vintage of secondaries funds is considerably larger than the last, though last year's closes suggest the mid-market may be an exception.

The largest secondaries funds in market are seeking considerably more for their latest flagship funds than the last in the series.

Nine of the 10 largest vehicles are targeting more this time around and aiming to grow their funds by an average of 75 percent, according to PEI data.

Pantheon appears to be the only firm bucking the trend.

Of the 10 largest secondaries funds to hold final closes last year, five raised more than double that of their predecessor while three increased in size by 28 percent or less. The four that grew by less were mid-market focused vehicles: funds in the $900 million to $2 billion range and a focus on acquiring limited partnership portfolios.

According to one London-based secondaries advisor, this highlights the fact that secondaries firms need either scale or a highly differentiated strategy in order to thrive. At the same time, there are good reasons not to grow too big.

“Rapid growth puts you into the same orbit as your Ardians and Lexingtons,” the advisor said. “Firms will think twice about whether they want that competition on deals, especially if they are less willing to use leverage.”

Secondaries funds focusing on real assets are excluded from the data.

*Article updated with new fundraising figures for Glendower Capital.