Private Equity Secondaries Fundraising, 2015 YTD

by Andrew White

  • 15 May 2015
  • PE

The private equity secondary market has experienced significant growth over recent years, with the aggregate capital raised by secondaries funds tracked by Preqin almost trebling between 2011 and 2014. But how is 2015 shaping up in terms of the size of private equity secondaries funds closed, those in market and the secondary transactions that have been completed so far this year?

As demonstrated in the chart below, 2011 saw 22 funds closed, with aggregate capital raised at $9.9bn. Though the number of funds closing each year has fluctuated, the aggregate figure for capital raised has continued to grow.

Despite only four more secondaries funds closing in 2014 than in 2011, the aggregate figure for capital raised grew to $27bn. This growth was in part driven by some of the secondary market’s biggest players closing funds in excess of $1bn; seven firms, including Ardian, Lexington Partners and Strategic Partners Fund Solutions, closed dedicated secondaries vehicles above this figure. Such demand from investors and confidence from fund managers demonstrates a strong desire to take advantage of the opportunities the secondary market offers.

This year looks likely to be another strong one for the private equity secondaries fundraising market, with $10.4bn secured by secondaries funds already. Preqin’s Funds in Market online service currently tracks a further 23 dedicated secondaries vehicles raising capital, which have an aggregate target size of $14.1bn. This figure does not include Ardian’s latest secondaries vehicle, Ardian Secondary Fund VII, which was announced in May and expects to begin fundraising later this year, targeting $9bn.

While it remains to be seen whether fundraising for this year will surpass that of 2014, it is clear a strong appetite for secondaries remains, particularly among managers with proven track records. The three vehicles in market with the largest targets are managed by Coller Capital (Coller International Partners VII - $5bn), Pantheon (Global Secondary Fund V - $2.5bn) and Partners Group (Partners Group Secondary 2015 - $2.5bn) – firms that are long-established secondary buyers. The vehicles themselves will all seek to acquire secondary fund stakes across a wide range of fund types on a global scale.

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