Survey says: secondaries keep diversifying

With roughly $40bn in deal volume last year and transactions spanning various asset classes and strategies, the secondaries market is as active as ever, as our new advisory survey finds.

Secondaries Investor has spent the last few weeks contacting the biggest names in the advisory space, who between them cover about two-thirds of the market, asking them for details of their 2015 deals. I’m excited to let you know we’ll be publishing the results of the survey next week and that several important themes have emerged.

Firstly, the range of deals across strategies and asset classes that advisors had worked on was more diverse than ever. Almost every advisor surveyed said they had worked on real assets deals last year, with infrastructure and energy growing segments. This is a space that is expected to boom, with the massive dip in commodity prices and growing acceptance of secondaries transactions in real assets driving dealflow, as we wrote on Thursday.

Some advisors, such as Campbell Lutyens, have dedicated infrastructure secondaries expertise alongside their private equity capability, while for others, secondaries in the asset class seemed to be part of a diverse mix. Our survey found that secondaries solutions – be they in the form of plain liquidity for limited partnership stakes, or complex GP-led restructuring deals – are becoming increasingly common across a range of asset classes and strategies that span everything from venture to real estate, hedge funds to mezzanine/debt, energy to funds of funds.

Indeed, GP-led deals were another crucial theme, accounting for around two-thirds of total transaction volume for at least three of our respondents. Such deals, which include restructurings and liquidity options, have proven they can make economic and logical sense for all stakeholders, Mark McDonald, head of Europe, Middle East Africa & Asia Secondary Advisory at Credit Suisse, told me.

“On the advisory side, it’s more solutions-driven, due in part because of the availability of capital, but also due to the increasingly entrepreneurial nature of buyers,” he said.

Within the GP-led transaction portion of the market, it may not all be plain sailing for complex restructurings, of course. Even before the Caspersen case emerged, the US Securities and Exchange Commission had signalled it was looking into fund restructurings and staples for conflicts of interest.

It’s unclear whether the regulator’s interest could lead to changes in how transactions are structured, but our survey emphasises that fund restructurings and GP-led recaps are a burgeoning part of the market, accounting for as much as 73 percent of one advisor’s deal volume last year.

Stay tuned next week for the results of our tally, including which advisor worked on the greatest amount of deal volume and other juicy details.

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