Volume of PE secondaries up in H1, Setter reports

Most of the volume was driven by large players and transactions of more than $600 million. Energy and real estate transaction volume was down.

The volume of private equity secondaries transactions in the first half of the year grew 1.9 percent to $16.2 billion, according to a report from Setter Capital released on Monday.

Other sectors such as energy and real estate were down and the overall volume of secondaries deals in the first half fell by 5.1 percent to $20.6 billion. Setter counts hedge fund secondaries deals in its overall tally.

The bulk of that total volume was driven by large buyers. The eight largest buyers, which more than $600 million each in the first half of the year, accounted for almost half of the total volume, up from 44 percent for the same period last year. Meanwhile the shares of mid-size buyers and small buyers decreased.

There were 586 transactions in the first half of the year with an average size of about $35.1 million. The average deal size rose by 49.5 percent year over year.

“The marked increase in large deals, the dominance of secondary funds and the increased market share of large players all demonstrate that the first half of 2015 was a banner first half for the large entrenched secondary players,” Setter wrote in its report. Transaction volume completed by large buyers was $10.1 billion, a 5.8 percent increase in volume year over year.

The volume of direct secondaries, which in Setter’s definition includes fund recapitalisations, restructurings, fund liquidations and purchase of single minority stakes and co-investments, was up 21 percent to $5.5 billion.

Here are volume trends for other sectors in the first half of 2015:

  • Real estate: volume was down 1.8 percent to $2.9 billion.
  • Energy: volume was down 78.5 percent to $350 million.
  • Infrastructure: volume was up 28.5 percent to $614.2 million.

For the full year, buyers expect the volume to reach $45.7 billion, which would be a 7.4 percent decrease over the $49.3 billion of 2014.

The report is based on a survey of 116 active and regular secondaries buyers.