There are 25 private equity secondaries funds currently in market, with an aggregate target size of $19.3bn. Almost a quarter (24%) of LPs tracked by Preqin’s Investor Intelligence online service have a preference for secondaries vehicles, meaning there is sizeable investor appetite for these funds.
Forty-eight percent of private equity secondaries funds in market are managed by North America-based GPs, 36% are offerings from European fund managers, and the remaining 16% are funds managed by firms headquartered in Asia. Preqin’s data reveals that the majority (60%) of secondaries vehicles currently on the fundraising trail plan to purchase stakes in US-focused private equity funds. Just under a quarter (24%) will purchase stakes in Europe-focused vehicles, while 16% will purchase interests in funds with a focus on Asia.
The largest private equity secondaries fund currently in market is Lexington Capital Partners VIII. The fund, managed by Lexington Partners, is targeting $8bn, with a hard cap of $10bn. It will seek to acquire LP interests in global buyout, venture capital and mezzanine funds, as well as making co-investments and direct investments. The fund held a first close in February 2014 on $5.5bn.
The second largest secondaries fund currently fundraising is Strategic Partners Fund VI. The fund, raised by Strategic Partners Fund Solutions, has a target size of $3.5bn. The fund will primarily purchase stakes in mature buyout funds; however, it may also purchase LP stakes in venture capital, mezzanine, real estate and fund of funds vehicles. It will purchase single fund interests as well as portfolios of funds, and will focus on the US and West Europe. Strategic Partners Fund VI held a first close in April 2014 on $1.25bn.
Targeting $2.5bn, Landmark Equity Partners XV is the third largest private equity secondaries vehicle currently in market. The fund, raised by Landmark Partners, will purchase buyout fund stakes in North America and Europe, and held a first close in December 2013.