Non-Traditional Secondary Market Buyers

by Antonia Lee

  • 28 Apr 2011
  • PE

Although the private equity secondary market was previously dominated by primary and secondary fund of funds managers, non-traditional secondary market buyers - also known as ‘tourists’ - are becoming increasingly active secondary market players. Preqin data shows that 62% of all investors looking to purchase secondary interests within the next 24 months are non-traditional buyers. Public pension funds make up the largest proportion of all non-traditional secondary market buyers, representing 22%. Insurance companies are also keen to take advantage of opportunities available on the secondary market, comprising 12% of all non-traditional buyers. Private sector pension funds and asset managers also form a considerable portion, each making up 10% of this investor type.

One example of a non-traditional secondary market investor recently showing an interest for the secondary market is Pension Fennia. The Finnish insurance company will consider gaining additional exposure to the private equity asset class through secondary investments over the next 12 months. It invests in a broad range of private equity fund types and is willing to invest on a global scale. Caledonia Investments is another institutional investor considering using the secondary market to increase its private equity exposure. Although the UK-based investment company has not previously purchased any private equity fund stakes on the secondary market, it is likely to consider secondary opportunities over the next 12 months. It is currently focusing on investing in US mid-market buyout opportunities, but it will also consider investing in Asia, particularly in India and China.

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