Secondaries fund closes average nearly $1bn

Last year, 23 private equity secondaries funds held final closes on a cumulative $22.2 billion, up slightly from 2012’s totals, according to PEI Research & Analytics.

Source: PEI Research & Analytics

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“Fundraising is very robust right now,” Ian Charles, partner at secondaries firm Landmark Partners, recently told PEI. “There are not as many big-name buyout funds coming to market in the next six months, and the market distribution is coming back to LPs – so secondaries are a very attractive place for them to reinvest their distributions and maintain their allocation to private equity.”

While fundraising figures are up from 2012, when 20 funds held final closed on a total $21.9 billion, average fund sizes have come down slightly to $964.78 million from $1.09 billion. Averages are skewed, however, by some of the ‘mega-funds’ closed in 2013, including Coller Capital’s $5.5 billion Fund VI and HarbourVest Partners’ latest secondaries vehicle, the $3.6 billion Dover VIII.

Real Desrochers, head of private equity for the California Public Employees’ Retirement System, told us earlier this week there’s been a “surplus” of dollars raised recently for secondaries, which has caused pricing on secondaries transaction to rise.

However, when considering the perennial question of whether there was ‘too much capital chasing too few deals’, other market participants point to growing year-on-year deal tallies as evidence that the capital being raised has plenty of places to be invested. Cogent estimated $27.5 billion-worth of private equity secondaries transacted last year, and believes the market will keep growing at the 10 percent per year rate it’s enjoyed recently.