Three years ago we wrote about égalité via the secondaries market in reference to Bpifrance‘s strip sale of private markets fund stakes. The move was part of a plan to democratise private equity for individual investors.

In that process, the French state-backed investment bank moved a 5 percent slice of its private equity assets into a fund and invited members of the public to buy exposure to it. All investors needed was a spare €5,000 and be a tax resident of France. Bpifrance has since replicated the process twice.

This week another France-based institution has decided to offer private equity exposure to non-institutional investors via the secondaries market, though at a smaller scale and for much wealthier investors. Tikehau Capital subsidiary Opale Capital said it had partnered with AlpInvest Partners, Goldman Sachs Asset Management and HarbourVest Partners to offer qualified investors equal thirds access to these three managers’ latest private equity flagship secondaries funds. Investors can get in for a minimum €100,000.

Why secondaries? The answer lies in Opale’s view on the market. The firm is a bit pessimistic about the macroeconomic environment and believes the risk of a recession in markets is high, Paul Moreno Blosseville, Opale’s president, told Secondaries Investor. As such, it has put together strategies for investors that it believes are defensive, and others which benefit from global megatrends.

Secondaries fits within its defensive play, according to Moreno Blosseville. Whereas a typical buyout fund might hold between 10 and 20 underlying companies, a diversified secondaries fund may have exposure to thousands of underlying companies, he said. As such, any accident is going to be a lot less impactful on the fund.

Secondaries funds’ ability to beat the J-curve is also attractive to non-institutional investors in that they get exposure to funds that may already be mature and are de-risked to a certain extent, with visibility into how underlying companies are performing – something Moreno Blosseville says is an additional layer of security.

The importance of opening up private markets to French individual investors is particularly acute: the average French household has less than 1 percent of its wealth invested in private markets assets, well below what might be around 10 percent in other markets such as the US or the UK, Moreno Blosseville said.

Opale isn’t exactly blasting open private equity to the global masses – its offering is relatively small, initially targeting €30 million to invest across those three funds, though this allocation is flexible. Still, it’s a small move that demonstrates why secondaries can be an ideal way to facilitate non-institutional investors’ access to private markets.

As Ares Management president Michael Arougheti has previously highlighted, when it comes to the “retailisation” of private equity, secondaries portfolios are the “best way” for non-institutional investors, in particular such as via 401(k) and defined contribution plans, to access the asset class.

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