Mega-funds, Asia are next drivers of restructurings

As restructurings and stapled deals become more mainstream, very large funds and Asian funds will provide more deal flow for such transactions, according to speakers at the British Private Equity and Venture Capital Association Summit 2015 in London on Thursday.

The next restructurings will be in private equity mega-funds, as the market for non-traditional GP-led secondaries deals becomes more mainstream.

“It will be one of the very large mega-funds choosing to do a transaction to tidy up a fund that’s seven to eight years old,” David Atterbury, managing partner at HarbourVest Partners, said at a panel discussion on secondaries at the British Private Equity and Venture Capital Association Summit 2015 in London on Thursday. “This will create further momentum for restructurings to become increasingly commonplace.”

For Pinal Nicum, a partner at Adams Street Partners who focuses on the Asian secondaries market, the next wave of funds for restructuring will be fuelled by Asian funds.

“Fund restructurings are very much a global phenomenon,” Nicum said. In certain markets such as India, a plethora of funds raised around between 2006 and 2007 are nearing the end of their lives, with some GPs of those funds not able to raise second or third funds, which may lead to restructurings or stapled deals, he added.

The pool of 2006- to 2008-vintage funds that could potentially be candidates for such deals represent about $187 billion in assets across 225 funds in Europe, and about $382 billion across 481 funds in the US, according to Thomas Liaudet, a partner at advisory firm Campbell Lutyens, who also spoke at the summit.