The secondary market is an important tool utilized by investors in the real estate asset class in order to gain exposure to fund interests for a range of reasons; some turn to the market because they did not manage to invest in a specific vehicle in the initial fundraising period, others because they want to increase their exposure to an existing fund in their portfolio.
Preqin’s Secondary Market Monitor currently tracks 159 LPs which have an interest in acquiring private equity real estate fund interests on the secondary market. These investors have aggregate funds under management of $3.8tn and are based in countries across the US (49%), Europe (44%), Asia (5%) and other economic areas outside of these regions (2%). Thirty-six percent of these investors are public and private pension funds, 10% are endowment plans, and private equity fund of funds managers, real estate fund of funds managers and asset managers each make up 8% of the sample. Other LP types in this group include insurance companies, foundations, family offices and secondary fund of funds managers.
Of the 159 investors with an interest in purchasing private equity real estate fund interests on the secondary market, APG – All Pensions Group is the largest, with over $484bn in assets under management. The Dutch asset manager invests in a range of real estate strategies, including core, core-plus, value added and distressed funds. Geographically, APG – All Pensions Group has global exposure to private equity real estate opportunities, including previous investments in Europe, India, China and US-focused vehicles.
Pictet Group currently has $400bn in assets under management, making it the second biggest investor with some interest in buying private equity real estate fund stakes. The bank takes an opportunistic approach towards the fund strategies it seeks exposure to via the secondary market, and has a preference for vehicles focusing on opportunities in Europe and the US. Pictet Group is not interested in gaining exposure to early secondaries, but will participate in a stapled secondary transaction.