Secondaries transaction volume reached a new record last year – $58 billion - with the bulk of it concentrated in the sale of LP stakes.
GP-led transactions represented only about 30 percent of that but that corner of the secondaries market grabbed the attention in 2017, as the Private Equity International Awards, which were revealed on Thursday, reflected.
The winners for secondaries deal of the year for the Americas, EMEA and Asia were GP-led transactions, and two of the winners for secondaries advisor of the year worked on some of the most talked-about GP-leds of 2017.
The deals illustrated the innovation that secondaries buyers have embraced amid increasing competition.
Take the winner for secondaries deal of the year in the Americas. With the Clearlake Capital deal, Landmark Partners demonstrated it has adopted preferred equity as part of the secondaries toolkit in its purchase of Reservoir Capital’s 20 percent stake in Clearlake’s GP management company.
In Asia, the winning deal was the $1.2 billion strip of assets of Warburg Pincus’ Asia portfolio made up of 29 Asian companies. Lexington Partners was the majority buyer.
Such transactions clearly show that GP-led secondaries are not confined to firms in distress but have much to offer healthy firms which want to address portfolio management or changes at the management company level.
The PEI Awards results also reveal that a focus on innovative deals is paying off for advisors.
Lazard, which won secondaries advisor of the year in Asia, advised Warburg Pincus as well as the winning secondaries deal of the year in Europe, the restructuring of southern-Europe-focused Investindustrial’s 2008-vintage fund.
While the secondaries community has predicted the rise of GP-led transactions for several years, perhaps the most surprising development in 2017 was the fact that most GP-led deals occurred in Europe.
Campbell Lutyens, the winner of secondaries advisor of the year in EMEA, played a big part in the region’s influence, having advised on several transactions including a tender offer and staple with BC Partners and the ongoing process on Nordic Capital’s Fund VII.