Private equity secondaries fundraising falls nearly 50%

Last year was the lowest for final closes since 2011.

Fundraising for private equity secondaries funds fell by almost half last year as managers look to close large vehicles in 2019.

Dedicated vehicles focusing on the asset class held final closes on $22.73 billion in 2018, a 48 percent drop compared with the $43.7 billion raised in 2017, according to Secondaries Investor data. This is the lowest annual figure for at least the last six years.

The largest funds – Ardian, Lexington PartnersColler Capital and Strategic Partners – did not hold closes last year, leading to the drop, according to Sunaina Sinha, managing partner at advisory firm and placement agent Cebile Capital.

“If you think about what drives secondaries fundraising volumes, it’s the big, multibillion-dollar funds, which will all be doing closes in 2019,” Sinha said. “I think we’ll see a big bump in 2019. We’ll probably see 2020 as another down year for fundraising volumes because all of the small guys combined can’t match the volume of these $10 billion to $12 billion fundraises.”

The largest fund to close last year was Landmark Partners‘ 16th flagship private equity fund which amassed $7 billion including co-investment capital, according to Secondaries Investor data. The second-largest was almost four times smaller – Pomona Capital‘s $1.8 billion raise for its ninth fund.

A swathe of managers are fundraising for private equity secondaries vehicles, with at least 50 funds seeking a combined $77.8 billion. Ardian, Lexington, Coller and Strategic Partners’ latest flagships account for 53 percent of this total.

Three of the top 10 largest funds in market across the wider private equity asset class are secondaries funds, with Ardian, Lexington and Coller accounting for 29 percent of the $114.7 billion being sought.

– Rod James contributed to this report.