Despite increased regulations and growing scrutiny from both political and investor points of view, aggregate assets under management (AUM) of private equity funds have surpassed $3tn for the first time. This $3tn AUM milestone is important for the private equity industry, as many LPs have sought out new methods to invest in the asset class. According to the Preqin Quarterly: Private Equity, Q3 2012, many LPs see the secondary market as an advantageous way to diversify their portfolios and access the private equity asset class. Of the LPs surveyed that already participate in the private equity secondary market, none expect to reduce their secondary market activities during 2012. Of the investors surveyed by Preqin, 29% said they plan to increase their secondary market activity in 2012 compared to 2011, and 71% expect to maintain their activity.
Preqin Investor Network currently tracks 32 secondaries funds in market, seeking an aggregate $28bn with an average fund size of $888mn. Of those vehicles, 21 are looking to seek investment opportunities in the US and 11 in Europe. Goldman Sachs Private Equity Group’s Vintage Fund VI is the largest secondaries vehicle on the road, and is looking to raise $4.5bn. The fund is expected to invest in secondary market offerings across a diverse range of private equity strategies and geographies. Partners Group Secondary 2011, another sizeable vehicle in market, is looking to raise €2bn in order to target a number of secondary investments in Europe, the US and Asia.