More than half of secondaries market trades came in at a discount in the third quarter, flipping the trend seen in the prior three-month period, according to a report from Palico.
Of the 69 trades monitored last quarter by the trading platform, 54 percent were discounted, according to its Secondary Pricing Report Q3 2022.
By comparison, 60 percent of the 65 fund interest sales that were monitored by Palico in the second quarter did so above par, Secondaries Investor reported earlier this year.
This quarter’s discounts look more in line with pricing seen in the first quarter of this year when as much as 58 percent of deal volume was discounted, according to Palico’s Q2 report.
Palico also listed pricing for funds that traded over the previous six months, some which commanded premium pricing. Veritas Capital Fund VI, a $3.55 billion 2017-vintage vehicle, received a successful bid of 112 percent of net asset value, topping Palico’s list.
The fund, managed by Veritas Capital, was followed by a secondaries vehicle – the $2.41 billion 2018-vintage ICG Strategic Equity Fund III, ICG’s dedicated GP-led vehicle – which traded at 110 percent of NAV. Union Square Ventures’ USV 2019 took out the third spot selling at 109 percent of NAV in the quarter.
Buyers are taking a scrupulous approach to those investments they are willing to make, sources tell Secondaries Investor. Palico noted in its report that its data shows how buyers have been pushing for discounts in recent months.
“While this ratio of-discounted-to-premium trades can change from one period to the next based on the quality of assets that come to market, recent activity suggests that buyers may be purposefully baking in more headroom as macroeconomic and market conditions remain challenging,” the report noted.
Average pricing across all secondaries market trades included in Palico’s Q3 report sat at 96 percent of NAV, down on the average 99 percent of NAV across trades in its Q2 report.
Those Q3 trades that came in at a discount saw average pricing of 90 percent of NAV. The 46 percent that priced at par or above had average pricing of 104 percent of NAV.