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Navigating full pricing, the rise of restructurings and the use of seller financing in today’s booming secondaries market were among the topics debated recently in New York at a PEI roundtable.
Secondaries buyers are increasingly using deferred payments and leverage to compete for assets. But smart structuring can also lock in returns in case there’s a new downturn in the euro zone.
Leverage was predominantly used to buy portfolios of stakes in mature buyout funds, according to Evercore.
Apax Europe VII recently exited Swiss mobile operator Orange Communications for $3bn.
About 63 percent of investors surveyed by Investec are likely to use third-party debt for a secondaries acquisition in the future, explains global head of fund finance at Investec Simon Hamilton.
2014 was the year of high priced fund books and cheap leverage, Coller Capital chief investment officer Tim Jones said.
Leverage is not new to the secondary market, but it has become more prevalent and consequently LPs should keep an eye on the impact of its use, says Chason Beggerow, a partner at private equity advisory firm Altius Associates.
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