Secondaries commitments fall in H1 amid fundraising squeeze

Secondaries fundraising dipped 30 percent year-over-year in the first half with $31.2 billion raised, according to preliminary data from Secondaries Investor.

The fall comes off the back of a rapid period of secondaries fundraising over the past two and a half years topped by a record $98.8 billion in 2020, $54.4 billion of which was raised in the first half, the data shows.

A total of 32 funds closed in the first six months of 2022, with 69 percent of their capital earmarked for multiple regions – in line with previous years.

Ardian held the largest final close in the first half, closing on the largest-ever infrastructure secondaries fund. ASF VIII Infrastructure reached its $5.25 billion hard-cap after nine months in market.

ICG’s Strategic Equity team also broke records, closing what is understood to be the largest dedicated pool of capital focused on GP-led secondaries. ICG Strategic Equity IV exceeded its $5 billion target, sources told Secondaries Investor.

Secondaries funds are out chasing $124.7 billion in a tight fundraising environment. LPs are battling with the denominator and numerator effects within their portfolios, as well as a bulging list of managers that are planning to or have come back to market with new funds.

Lexington Partners and Ardian are both out seeking $15 billion for their flagship secondaries funds Lexington Capital Partners X and Ardian Secondary Fund IX. If they reach their targets they would tie for the largest standalone funds dedicated to the strategy, beating their respective predecessors, which both collected $14 billion.

However, Blackstone Strategic Partners could come out on top. Strategic Partners Fund IX has a target of $13.5 billion, but chief operating officer Jon Gray said in October that the vehicle is on track to reach “approximately $20 billion”. The fund has already held a $14 billion first close, according to Secondaries Investor data.

Secondaries investors are taking a cautious approach to deployment due to pricing uncertainty in the current environment, sources told Secondaries Investor. Secondaries buyers and advisers have lamented the fact that there is not enough capital to invest in all of the opportunities available. With the current macroeconomic backdrop, secondaries investors are picking premium transactions to invest in off the back of 2021’s flurry of activity.

“There are limits as to how much capital is truly out there relative to the supply,” Immanuel Rubin, head of European secondaries at Campbell Lutyens told Secondaries Investor in a recent interview. “I think the jury is a little bit out as to how this can get resolved.”