With a plethora of opportunities available to it in the secondaries market, Partners Group is targeting $10 billion-$12 billion for its latest secondaries programme.
The Baar-Zug-headquartered investment firm has seen around two- to three-times more deal opportunities within the secondaries market compared with the dealflow it was evaluating for its last programme, the firm’s chairman of Asia and global executive board member Kevin Lu told attendees at the Milken Institute Global Investors’ Symposium in Hong Kong on Tuesday.
Partners Group is targeting a larger programme than its predecessor, he added.
Primary and fund of funds commitments have been growing by 13-14 percent over the past 20 years, which is fuelling LP-led activity, Lu said. Given the exit environment is much slower, there are more LPs that are also searching for ways to realise returns. Higher interest rates and the rising cost of capital for LPs is also spurring on activity.
“You have more reason to sell. We see much bigger deal flows on the secondary side,” which has in turn driven its target fund size, Lu said.
The $10 billion-$12 billion target is related to Partners Group’s whole programme, including funds, mandates and other products, according to a source. Typically, the firm raises around 50 percent via its dedicated flagship fund and the remaining capital via other managed private markets programmes and bespoke products for Partners Group clients, the source added.
Partners Group sought $4 billion for its predecessor flagship fund Partners Group Secondary 2020, Secondaries Investor reported in 2019. That $4 billion target was around 43 percent larger than the firm’s predecessor, which raised €2.5 billion in 2016, according to Secondaries Investor data. Fund 2020 represented the fund part of its predecessor programme’s raise, according to a source.
A spokesperson declined to comment on the size of the predecessor programme and on the specifics of this latest strategy.
Partners Group Secondary VIII launched in August 2023, according to Secondaries Investor data. The target for that vehicle has not been disclosed. The firm is also in market with Partners Group Infrastructure Secondary, which launched at the same time, Secondaries Investor data shows.
Partners Group last year emerged as the buyer of a portfolio of partial stakes in funds and co-investments with a net asset value of roughly $1.1 billion from Canadian pension giant Caisse de dépôt et placement du Québec, affiliate title Buyouts reported. The deal represents the firm’s largest secondaries deal on a total adjusted commitment basis, a source said.
Many LP sellers are now anticipating interest rates will remain higher for longer, which could drive a record year for LP portfolio transactions, managing director Ross Hamilton told Secondaries Investor earlier this year. This will be especially relevant as deferred payments and closings become more prevalent. “Understanding seller needs and offering customised solutions will likely be crucial in unlocking the most attractive transactions.”
Partners Group also anticipates LPs will deploy “significantly more” into secondaries this year, Hamilton noted, adding that 2024 could be “one of the strongest vintages, given secondaries have historically outperformed following periods of dislocation”.
LP-led secondaries activity made up $60 billion of the $112 billion of volume seen in the secondaries market last year, according to a report from Jefferies. Pension funds and sovereign wealth funds remained the most active sellers in the market, accounting for 62 percent of LP volume.
There were 19 LP portfolio deals over $1 billion in value sold in 2023 representing 60 percent of total LP volume, the report found. That was up from up from 12 such transactions in 2022. LPs’ desire for liquidity drove 36 percent of all investor selling activity compared with 14 percent in 2022.
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