Secondary market exercise hit a document excessive of $69bn (£52.5bn) within the first half of 2024, boosted by a beneficial pricing surroundings for US and European large-cap buyout, infrastructure and personal credit score funds.
A report from funding banking advisory agency Greenhill highlighted a 57 per cent year-on-year enhance throughout secondary markets, pushed by the necessity for liquidity from each LPs and GPs.
The availability was met with sturdy demand from consumers, who had been eager to deploy document ranges of contemporary capital.
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Buyout funds made up 65 per cent of secondary deal volumes within the first half of the 12 months, adopted by enterprise/progress funds (15 per cent).
Infrastructure/actual property accounted for eight per cent of deal volumes, adopted by personal debt at six per cent.
Fund of funds/secondaries accounted for 5 per cent of volumes.
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North American funds accounted for 67 per cent of the market adopted by European funds at 25 per cent, which Greenhill mentioned reveals that consumers continued to favour US property over European ones because of the extra optimistic macroeconomic outlook within the former.
Trying forward, Greenhill expects secondary volumes to succeed in $130bn over the entire of 2024, with US rate of interest cuts and bettering M&A exercise set to assist pricing.
“We’re excited concerning the outlook for the rest of 2024 as a stabilized macroeconomic surroundings (together with an additional discount in inflation and the prospect of rate of interest cuts within the US), and the continued want for liquidity from each LPs and GPs lead us to count on full-year transaction quantity nearer to the document of $134bn reached in 2021,” the report mentioned.
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“Probably the most seen clouds on the horizon are the continuing geopolitical pressure and rotation from the Magnificent Seven to small- and mid-cap shares, which can negatively impression pricing for large-cap funds with important tech publicity.
“Within the close to time period, progress will proceed to be pushed by sturdy momentum in LP portfolio gross sales and sustained ranges of GP-led exercise in its place exit path to conventional M&A and IPOs. Purchaser urge for food is prone to stay sturdy on the again of a major quantity of dry powder, which we estimate at $269bn.”