While primary and secondary funds of funds, as traditional buyers of private equity fund stakes, dominate the market in terms of deal volume, the non-traditional buyers or ‘tourists’ make up the largest proportion of all secondary market buyers. Non-traditional buyers account for 62% of all secondary market investors on Preqin’s Secondary Market Monitor. Public pension funds form the largest portion (21%) of all non-traditional buyers, followed by private sector pension funds, asset managers and insurance companies, representing 13%, 12% and 11% of all non-traditional buyers, respectively.
In terms of location, 45% of all non-traditional buyers of private equity funds stakes are located in Europe, while 43% are in North America, and the remaining 11% are based in Asia and Rest of World. One investor located in Asia currently looking to utilise the secondary market is NUS Endowment Fund. The National University of Singapore recently indicated that it will look to buy real estate fund interests on the secondary market in 2012. It has a preference for value added and opportunistic strategies with a focus on Asia.
Another non-traditional secondary market buyer which has recently expressed an interest for the secondary market is Pennsylvania Public School Employees' Retirement System. The US public pension has launched a new $100mn private markets and real estate programme, which includes an allocation to direct secondary investments. It is likely to use the secondary market to gain additional exposure to existing private equity and real estate funds in its portfolio.