NYPPEX: LP stake deal volume halved in Q1– exclusive

Buyers were reluctant to price deals off September NAVs, which contributed to the decline in deals, according to the advisory firm's Q1 report.

The volume of fund stakes transacted on the secondaries market dropped by almost half in the first quarter of 2016 amid volatility in public markets and buyers’ concerns about net asset values (NAVs), according to a report by NYPPEX Private Markets.

Laurence Allen
Laurence Allen

Globally, limited partnership interest deal volume fell 45 percent during the first quarter of 2016 compared with the same period a year earlier, according to details from the advisory firm’s 1Q2016 Secondary Private Equity Market Trends and Outlook Worldwide, seen by Secondaries Investor.

“In the first quarter of 2016, many secondaries buyers retreated to the sidelines or reduced prices due to stock market volatility and declining exits, while prospective sellers decided to delay secondaries sales of interests in private equity funds,” the report noted.

Most of the sales involved stakes in European buyout funds, followed by US buyout funds. NYPPEX declined to give the dollar figure on which the report’s data is based.

Buyers’ reluctance to price deals off September 2015 NAVs also contributed to the drop in deal volume, which was worse than expected, according to Laurence Allen, NYPPEX’s chief executive.

Concerns about declining valuations and exit uncertainty resulted in deal volume for direct secondaries gaining ground over LP stakes, with NYPPEX estimating around a 12 percent rise during the first quarter, year on year.

NYPPEX based the report on its own client surveys, as well the deal volume and pipelines it sees.