Secondaries is second-most popular strategy after private credit – Coller survey

Private equity secondaries will be a $500bn market by 2030, the firm's founder and chief investment officer Jeremy Coller tells Secondaries Investor.

Secondaries is high on institutional investors’ shopping list when it comes to increased private markets commitments.

Of the 110 global investor respondents to Coller Capital’s latest Global Private Capital Barometer, 38 percent of respondents expect to increase their allocations to secondaries over the next 12 months – making it the second-most in demand private markets strategy behind private credit. A further 48 percent expect their commitments to secondaries to remain the same while 15 percent are looking to decrease their commitments.

“The outlook for private equity secondaries is particularly positive [in the Barometer]. With the current growth rate set to continue, I anticipate that private equity secondaries will be a $500 billion market by 2030,” Jeremy Coller, chief investment officer and managing partner, said in a statement to Secondaries Investor.

“By 2050, I believe when investors speak of ‘private equity’ they will be referring to the secondaries market and traditional PE, buyouts, will be known as the primary market,” he added.

Asia-Pacific LPs were particularly keen on the asset class with 70 percent of respondents in the region indicating they plan to increase their allocation to secondaries over the next 12 months. “This underscores a robust interest in the strategy that may still be in its nascent stages in APAC compared to the rest of the world,” the report noted.

When it comes to specific asset class expansion, 73 percent of respondents expect a significant expansion in private equity secondaries over the next three years. That was followed by private credit secondaries with 63 percent of respondents anticipating growth, and infrastructure with 60 percent of respondents betting on an increase in size.

“The reality of our market today is there is still a need for liquidity,” Hani El Khoury, a partner at Coller, told Secondaries Investor. There is “a realisation that the secondaries market is still a very small percentage of the primary market. Even if it grows in line with the primary market, we’re going to see strong growth.

“We expect it to grow faster and for it to continue to be an attractive tool for liquidity, an attractive tool to hold on to assets longer and align stakeholders around quality assets in the market,” El Khoury added.