Secondaries is driving advisory consolidation

Advisories with secondaries capabilities are proving particularly attractive in the race to offer clients a one-stop-shop.

Secondaries is proving a key driver of acquisitions and tie-ups in the private markets universe.

Late last month, it emerged that Houlihan Lokey had agreed to buy Paris-headquartered placement agent Triago. The latter has, along with its primary fundraising and direct financing capabilities, advised on the transfer of more than 3,500 private equity fund stakes on the secondaries market on behalf of some 200 clients, per a statement.

It followed a number of moves in the advisory industry in 2023 centred around secondaries strategies.

Mizuho Americas also announced in December plans to integrate the secondaries capabilities of Greenhill Private Capital Advisory with the primary capabilities of existing platform Capstone Partners under its newly created Mizuho Private Capital Advisory unit. While the move represents just a fraction of Mizuho’s designs for the acquisition of Greenhill as a whole, Greenhill PCA adds firepower to Mizuho’s ambitions for financial sponsor advisory following its acquisition of Capstone in 2022.

Placement agent Monument Group and boutique secondaries advisory firm Mozaic Capital Advisors unveiled plans to merge after an eight-year strategic alliance in June. Monument managing partner Mike Miller told Secondaries Investor at the time that it is necessary for value-added advisers to have both primary fundraising and secondaries market capabilities.

Taking a different tack, Campbell Lutyens and JPMorgan opted to remain independent, entering into a strategic collaboration to jointly advise on single-asset and concentrated multi-asset continuation fund transactions.

The model of pure play placement agents has come under pressure from investment banks like Evercore, PJT Partners and Lazard, which have put up meaningful competition with their own internal private capital advisory teams.

This squeeze comes amid soaring LP demand for liquidity, prompting managers to explore GP-led secondaries processes.

In an interview with affiliate title Private Equity International last year Mounir ‘Moose’ Guen, chief executive of the now-insolvent MVision, said its decision not to enter secondaries at scale was a significant factor in its demise.

Secondaries advisory shops with a strong track record and healthy activity are in hot demand from investment banks that are looking to break into the space. For secondaries players, having access to investment banking knowledge, relationships and sector expertise is critical amid an increasingly competitive market.

“It’s like a Lego game – you need to have the different bricks to ultimately be able to make it work for your clients,” an adviser told Secondaries Investor. “To be able to provide independent advice while at the same time having the ability to cover all of the different potential solutions and to have the products in-house is the right way to go to be positioned to be successful in the future.”

For advisers and investment banks alike, the quest to become a one-stop-shop will lead to further consolidation. Those with secondaries capabilities are being pushed to the top of the wish list.