The secondaries market continues to evolve and 2018 was the year the Americas came to the GP-led party in a meaningful way, as sister publication Private Equity International‘s 2018 awards demonstrate.
North America has generally accounted for the majority of secondaries portfolio sales. In 2018 the region overtook Europe for GP-led deals as well – North America accounted for 63 percent of such deals by transaction value, compared with just 23 percent last year, according to research by advisor Lazard.
Latin America also played a part with the $950 million restructuring of three funds managed by Peruvian private equity firm Enfoca Investments the largest such deal to come from the region.
GP-led deals became increasingly innovative last year with restructurings, single-asset deals, strip sales and spinouts of all shapes and sizes making headlines. The winning submissions in the Americas category are testament to this creativity.
- Lexington Partners
- Whitehorse Liquidity Partners
The secondaries market continues to grow and Lexington Partners is vital to this expansion. The New York-headquartered firm made headway with its ninth secondaries fund, which is seeking the biggest amount ever sought for the strategy, and closed or committed to 44 secondaries transactions totalling $6.4 billion. 2018 was a year of change for the firm as well with the completion of a leadership succession that saw Wil Warren become president of the firm. The firm’s reach is truly global – its deal log last year included a GP-led process on TPG’s Asia funds and a directs deal with France’s Eurazeo. Chances are the secondaries market will continue to hear much more of Lexington in 2019.
- Ardian and Campbell Lutyens for the spin-out of Manulife/John Hancock’s infrastructure team
- Goldman Sachs, Hamilton Lane and Lazard for the NEA spinout and directs deal
- CPPIB, HarbourVest, StepStone, Park Hill for Providence’s GP-led process on Fund VII
The secondaries market has been spreading beyond just private equity in recent years with asset classes such as infrastructure “only going to get larger”, according to Campbell Lutyens partner Gerald Cooper. Indeed, infra accounted for around 17 percent of GP-led secondaries deal volume last year.
In June Ardian worked with Canadian insurer Manulife Financial to carry out the largest stapled secondaries deals in North America for 2018.
Of the six alternative asset classes in which Manulife invests, as of spring 2017 infrastructure was the only one that had not been opened to outside investors. The deal, advised on by Campbell Lutyens, resulted in the creation of a $2 billion fund and marked the entry of Manulife’s infrastructure investment team into the world of third-party asset management.
- Park Hill
Evercore has been expanding its private capital advisory business including the acquisition last year of competitor Greenhill’s real estate fundraising team. PCA, led by global head Nigel Dawn, executed some eye-catching deals last year, including the restructuring of energy-focused private equity firm Lime Rock Partners’ 2006-vintage fund and mid-market firm Vestar Capital Partners’ 2005-vintage vehicle. The team also advised on some huge LP portfolio sales from Maryland State Retirement and Pension System and Florida State Board of Administration. With 64 professionals around the world, Evercore’s PCA team looks set for another exciting year.
- Kirkland & Ellis
- Gibson, Dunn & Crutcher
Kirkland & Ellis advised on about $18 billion in North American secondaries transactions in 2018 across 51 different deals, including an impressive number of GP-led transactions as that part of the secondaries market is growing at a quick pace. It was involved in seven GP-led restructurings totalling $4 billion in value, addition 10 GP liquidity investments by secondaries investors for an aggregate of $5 billion and two stapled tender offers for $1.2 billion. In other parts of the secondaries market, it assisted in 24 portfolio sales for $4.5 billion and 20 preferred equity secondaries investments representing three different investors. “Kirkland’s strong presence in the secondaries market is a result of the team-oriented approach Kirkland takes to transactional work,” says Michael Belsley, global head of Kirkland’s secondaries market practice.