As prices received for private equity fund stakes on the secondary market have increased, we have seen a significant boost in secondary market activity over the course of 2010. Princess Private Equity Holding is one of the latest investors looking to take advantage of the benefits associated with selling a private equity portfolio on the secondary market. Following a recent board meeting, the listed fund of funds decided to sell off a number of private equity fund stakes in order to resume dividend payments and to gradually refocus its investment strategy towards direct private equity investments. Princess Private Equity is moving towards direct investments as it feels such investments have the advantage of increased dividend visibility and an absence of unfunded commitments.
Other secondary market activity reported this month includes the completion of Bank of America Equity Partners’ secondary market sale. It has sold off USD 1.2 billion in private equity fund stakes to Lexington Partners and China Investment Corporation, which each purchased USD 600 million of the portfolio. Public Sector Pension Investment Board and CPP Investment Board also finalized a secondary deal this month. PSP sold approximately USD 1 billion in private equity fund stakes to CPP Investment Board, which is one of the largest portfolios to be purchased by a pension fund.
The private equity secondary market is a rapidly evolving and non-transparent market. The Preqin Secondary Market Monitor provides vital intelligence for sellers, buyers and advisors.