Dover Street XI nearly double the size of its predecessor, while Secondary Overflow Fund V amassed $3.4bn
(This article has been updated to include quotes from Monument Group.)
August 20, 2024 (Preqin News) – Boston-based HarbourVest Partners has beaten its fundraising targets to raise $18.5bn for its two latest secondary vehicles.
Private equity secondaries fund Dover Street XI closed at $15.1bn, the fourth-largest secondaries fund ever – almost twice the size of Dover Street X, which closed in October 2020 at $8.1bn – and ahead of its $12.0bn target, according to Preqin data. Secondary Overflow Fund V, a co-investment vehicle, raised $3.4bn, far larger than the $635.6mn collected by its predecessor.
‘The secondaries market has grown in both size and complexity, and HarbourVest continues to differentiate ourselves in our ability to deliver customized liquidity solutions to GPs and LPs at scale,’ Jeff Keay, Managing Director at HarbourVest Partners, said.
HarbourVest has deployed over $55bn into almost 650 secondaries transactions since it was set up in 1982.
The firm, which has an AUM of $127bn, received investment from a broad base of global LPs, including corporations, pension funds, sovereign wealth funds, and private wealth investors. Investors include State of Connecticut Retirement Plans and Trust Funds, New Hampshire Retirement System, and Nebraska Investment Council, who each committed upwards of $50mn, according to Preqin Pro.
‘The secondary market has grown considerably over the past decade. If you look back at volume from 10 years ago, we were below the $50mn mark. Today we're expecting volume to be over $130bn worldwide,’ Christine Patrinos, a Partner at placement agent Monument Group, told Preqin News.
Over half of LPs (57%) surveyed in Preqin’s Investor Outlook H2 2024 believe that secondaries strategies present the best opportunities in private equity. Secondaries offer buyers vintage and manager diversification, while sellers can generate liquidity and manage exposures to funds, managers, strategies, or vintages. There has been a return to the market of LP-led transactions over the past couple of years, increasing the chances of buyers being able to acquire positions at discounts.
‘There continues to be diversified portfolios on the LP side, and many of the transactions that we see on the LP side have both European and US assets, as well as some other global assets. We see many GPs utilizing secondaries now today as well, making up about 50% of transaction volume’, Patrinos said.
Secondaries AUM reached $512.5bn in December 2023, more than doubling since 2019 ($226.4bn). So far this year, 25 funds have closed raising a combined $45.7bn, lagging the $94.7bn from 60 funds closed in 2023. However, secondaries fundraising is largely driven by a small number of GPs who are in a three-year fundraising cycle.
The highs and lows of secondaries fundraising
Private equity secondaries fundraising, 2015–2024 YTD
Source: Preqin Pro. Data as of August 2024
Last year, Lexington Capital Partners X closed at $22.7bn – ahead of its target of $15bn; Blackstone’s Strategic Partners IX hit $22.2bn; and Goldman Sachs Vintage IX Flagship raised $14.2bn. These three vehicles accounted for more than three-quarters (77.4%) of the secondaries capital raised in 2023.
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.