A record amount of limited partnership interests traded on the secondaries market last year with deal volume rising almost 10 percent year-on-year, according to NYPPEX Private Markets.
An estimated $41.4 billion changed hands in 2017, eclipsing the record $40.6 billion in 2015, according to excerpts from a report obtained by Secondaries Investor.
The record level of deal volume last year was expected by many market participants and there is plenty of room for growth, said Laurence Allen, the intermediary’s chief executive.
“$41.4 billion in secondary volume still only represents an annual turnover rate of approximately 1 percent,” he said. “NYPPEX projects that secondary turnover rates will reach 5 percent in the near future, or approximately $205 billion annually.”
NYPPEX based its estimate on deals it has intermediated and client surveys. The figure covers gross cash proceeds plus unfunded commitments across buyout, venture, mezzanine, fund of funds, natural resources, distressed debt, real estate and hedge funds.
The firm declined to share its estimates of deal volume per asset class.
Median bids for stakes in venture capital funds rose by 8.2 percent to 85.1 percent of net asset value, the biggest gain across all strategies. Energy and natural resources funds had the biggest decline, falling almost 10 percent to 84.3 percent of NAV.
Pricing for buyout funds was 98.3 percent of NAV, according to NYPPEX’s estimates.
The age of funds is increasing, with the number of private equity funds aged 15 years or older comprising around 24 percent of global funds as of 30 September. This compares with 16 percent around four years prior.
NYPPEX estimates $45.5 billion will trade this year, a 9 percent increase year-on-year, based on its deal pipeline and surveys of its clients.