Of the investors on Preqin’s Secondary Market Monitor that are looking to purchase fund interests on the secondary market, 67 would invest in early secondaries. The majority of these investors are private equity fund of funds managers, who represent the majority (64%) of early secondaries investors, followed by secondary fund of funds managers (6%) and private sector pension funds (4%). Forty-five percent of investors with a preference for early secondaries are located within North America, followed by Europe (43%), with 12% located within regions outside of traditional economies.
The largest institution by assets under management which would invest in early secondaries is United Overseas Bank. The $225bn Singapore-based bank seeks to acquire interests in Asia-focused funds with post-2003 vintages. The firm would consider participating in a stapled secondary transaction.
AlpInvest Partners is the second largest institution by assets under management which would invest in early secondaries. The $48bn private equity fund of funds manager is based in the US, and invests on the secondary market through its funds of funds and dedicated secondaries vehicles. The firm’s latest vehicle, AlpInvest Secondaries Fund V, which held a final close in October 2013 on $750mn, will invest solely on the secondary market. AlpInvest Partners looks to purchase stakes on a global basis in a variety of fund types, including buyout, growth and mezzanine. Its strategy when investing on the secondary market is fluid; it is able to purchase both single LP interests as well as portfolios of funds, and also to engage in direct secondary transactions.
The third largest institution by assets under management which would invest in early secondaries is Ilmarinen Mutual Pension Insurance Company, based in Finland. The $44bn insurance company utilizes the secondary buyers’ market to gain access to global buyout funds with vintage years between 2004 and 2011. It primarily looks to purchase interests in existing funds within its portfolio in order to increase exposure, although it will consider purchasing stakes in private equity funds which it has not yet invested in. The firm will purchase both single fund interests as well as portfolios of funds, and does not participate in stapled secondary transactions.