StepStone reaches $1.6bn for latest secondaries flagship raise

StepStone Group has reached approximately $1.6 billion for its latest secondaries flagship, according to filings with the US Securities and Exchange Commission.

It is unclear what StepStone Secondary Opportunities Fund V is targeting. The vehicle has been in market since May 2022, according to Secondaries Investor data.

Predecessor Fund IV closed on $2.1 billion in 2020 against a $1.25 billion target, Secondaries Investor reported at the time.

A spokesperson for StepStone declined to comment on the raise.

The listed investment manager is also in market with other secondaries vehicles. StepStone Real Estate Partners V held a $900 million first close in the first quarter, Scott Hart said during the firm’s investor day presentation in May. Its predecessor closed above its $1 billion target, reaching $1.4 billion in 2020, Secondaries Investor data shows.

Its StepStone Private Markets Fund and StepStone Private Venture and Growth Fund private wealth products also invest in secondaries. The former, SPRIM, is $1.3 billion in size and targets deployment of 40 percent to 70 percent into secondaries transactions, according to its investor day presentation. The latter $300 million SPRING vehicle is targeting deployment of 50 percent to 70 percent into secondaries.

The LP-led secondaries market has become “particularly interesting” and “oftentimes runs counter-cyclical to other parts of our business,” Hart said on the investor day call. “After a nearly 10-year period where pricing was in the mid-90s as a percentage of NAV, we’re now seeing buyout strategies pricing in the mid-80s implying a mid-teens discount” with pricing for venture capital coming in at an even steeper discount.

“Clearly this is largely driven by LPs looking to rebalance their portfolios and bring their private equity allocations back into line with their target allocations, and given our position in the marketplace, given our GP relationships, our sourcing capabilities, our information advantage, we’ve been able to buy at an average discount of closer to 18 percent throughout our history here at StepStone,” Hart said.

All of its GP-led secondaries transactions have been with first and second quartile managers, with “77 percent of that being alongside first quartile managers”, Hart said.