Secondaries buyers and funds of funds are increasingly using the secondaries market to sell tail-end assets and actively manage their portfolios, but Ardian is not one of them, Olivier Decannière, head of Ardian UK, recently told Secondaries Investor.
“We could get a good price now on the market, but if we wait three years it might mean more money for our investors,” Decannière said. “If you sell now, you take today’s price rather than how much you feel you can expect from the portfolio. Over a long-term period, you will continue to create value, so often we would rather wait than sell.”
Deal flow in the top end of the market is strong, with US pensions continuing to dispose of large portfolios, Decannière said, adding that Ardian’s sweet spot for deals is above $500 million.
The French fund of funds is currently in market with its latest dedicated secondaries fund, Ardian Secondary Fund VII, targeting $9 billion, according to PEI’s Research and Analytics division.
Only a handful of other players have raised or are targeting similar-sized funds: Lexington Partners raised $10.1 billion in April for its latest secondaries vehicle, Lexington Capital Partners VIII, and Coller Capital and Strategic Partners are in market seeking $5.5 billion each for Coller International Partners VII and Strategic Partners Fund VII.
With such large funds being raised and robust deal volume fuelling high pricing, large public and corporate pensions and sovereign wealth funds are being enticed to sell on the secondaries market, thought this has not yet tempted Ardian to sell, Decannière said.
“There might be a crisis tomorrow, but we are long-term investors,” he said. “Of course we constantly review whether we should sell or not. But over the long term, as long as you are more comfortable keeping the asset and creating value for your investors, it’s often best to keep it. This is what we have done so far.”