2018 Secondary Market Overview
Category: Secondary Market Research Year: 2018
Strong pipeline and innovative deal structures suggest continued health of secondaries market in 2018.
Campbell Lutyens has published its annual report on the global secondaries market, providing insight on current market dynamics and outlook for 2018. The report is based on proprietary data and survey responses from more than 50 of the largest and most active secondary funds globally.
In 2017, $32 billion of dedicated secondary capital was raised, almost double what secondary buyers indicated they would seek to raise at the beginning of the year. Transaction volume increased by 41% over the previous year, estimated at approximately $48 billion, with LP-led transactions continuing to dominate.
By all indications, the secondary market will continue to be robust in 2018. With dedicated secondary funds increasing in size and new players entering the market, signs point to transaction volumes that match or outpace 2017, as well as more complex transactions being brought to market.
Key findings include
THE RETURN OF BILLION DOLLAR TRANSACTIONS:
an increase in the number of transactions closing at or above $1 billion, as a result of large sellers seeking to de-risk and profit from market conditions
Fertile grounds for GP-led transactions:
accounting for 28% of the market in 2017, a further wave of further GP-led deals is expected in 2018, with an increased quality of sponsors
Growth in emerging market deal flow:
increased supply of exposure from Asian, Eastern Europe and Latin America has been met with reasonably strong demand from buyers
Increased flexibility for single asset transactions:
as returns for diversified portfolios have been compressed, buyers have been completing more single asset deals
Expansion into real assets:
traditional private equity buyers are increasingly evaluating other strategies, including large infrastructure and energy transactions
Secondary market specialisation:
as the market expanded, secondary buyers raised strategy-specific funds focused on, amongst other strategies, tail-end portfolios and GP-led deals