Median bid for LP stakes estimated at 84% NAV

The median bid for limited partner stakes traded on the secondaries market was estimated at 83.85 percent of net asset value as of 5 December, according to NYPPEX Private Markets.

Median bid prices grew 1.2 percent from 2013 to 2014.

“We believe higher median secondary prices in 2014 were driven primarily by secondary buyers’ use of leverage, of which European buyers have been the most aggressive,” said Laurence Allen, NYPPEX’s chief executive officer.

He added this was the case for both portfolio sales and single one-off sales.

“Both methods drove median prices higher, in that diversified portfolios were easier for secondary buyers to finance with leverage, while some single interests attracted aggressive bids from certain secondary buyers that sought to solve portfolio rebalancing objectives.”

Estimates of the median high bids for LP interests also grew 1.7 percent year over year to 95.98 percent of NAV. Most high bids ranged between 94 percent and 100 percent of NAV for 2004- to 2008-vintage funds, NYPPEX said in a statement.

Allen doesn’t expect median prices to increase further in 2015, adding that 2014 presented optimal conditions for buyers to add leverage and pay high prices.

“We believe there will be little to no further increase in median secondary prices in 2015 because secondary buyers’ median IRRs worldwide declined to approximately 12 percent in the fourth quarter of 2014, versus 16 percent in the fourth quarter of 2013. Interest rates were also probably at their lowest point in the rate cycle,” he said.

NYPPEX’s report comes weeks after Credit Suisse private funds group estimated median prices  for LP interests was 96 percent of NAV during the third quarter. ELM Capital also revealed estimates close to 95 percent NAV for the first half of 2014.