Secondary Market Activity on the Increase

by Antonia Lee

  • 24 Jun 2010
  • PE

Activity in 2010 so far is supporting our predictions that the private equity secondary market is ready for growth. In contrast to 2009, H1 2010 has seen an increased number of sellers coming to the market with portfolios of private equity fund interests that they are looking to exit. In April of this year, Bank of America Equity Partners was involved in one of the largest secondary market transactions to ever take place. It sold a USD 1.9 billion portfolio of private equity fund interests to AXA Private Equity. The bank decided to sell the portfolio of fund interests in order to reduce its private equity fund investments and unfunded commitments and to manage its risk-weighted capital over the long term.

Another institution involved in selling private equity assets this year is Saad Group. In May 2010 Saad Group’s subsidiary, Saad Investments Company,  sold USD 450 million of private equity fund commitments on the secondary market as part of an effort to restructure the conglomerate's debt. The sale consisted of over 30 private equity funds. Royal Bank of Scotland is also close to completing a secondary market deal with AlpInvest Partners. The bank has decided to sell its private equity fund stakes as part of a move to shed non-core assets and simplify its balance sheet after losses resulting from the financial downturn. AlpInvest Partners is likely to take on the bank's portfolio of European private equity funds for EUR 400 million.

There are several factors that are contributing to an increase in the number of institutions offering portfolios of private equity fund stakes on the secondary market. Read Preqin’s full report, Private Equity Secondaries: The Market in 2010, which covers the current motivations for selling on the secondary market and our expectations for the market over the course of 2010. The Preqin Secondary Market Monitor provides vital intelligence for private equity secondary sellers, buyers and advisors.

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