The average secondaries buyer completed between three and four single-asset deals in 2017, according to research by Campbell Lutyens. Recent examples include TDR Capital‘s efforts to move the remaining asset in its 2007-vintage buyout fund into a new vehicle, and PAI Partners‘ similar process on its 2005-vintage fund, as Secondaries Investor reported.
In this 1-minute video Pablo de la Infiesta, managing director and head of the private funds advisory group for EMEA at Moelis & Company, argues secondaries firms are the natural buyers in single-asset fund restructurings as they have the sophistication and the firepower to look at single company situations while keeping a diversified approach throughout their funds.
I think that’s a very natural evolution of the secondaries space. We’ve seen it go all the way from secondary buyers investing in very diversified situations in the past. These were primarily the portfolios of funds, highly diversified. You then saw the emergence and focus by a lot of secondary buyers on portfolios of directs, but again, these were portfolios. A very natural evolution is for secondary buyers to look at more concentrated portfolios and even single-company situations.
I would generally say that… there are certain needs, certain situations need to be solved and the natural buyer, or the natural architect to solve these situations are the secondary buyers. If the secondary buyers could choose they probably would always prefer a diversified investment and a good return, but equally they have the sophistication and the firepower to look at single-company situations while keeping a diversified approach across the vehicles that they’re investing in.