Secondary market exercise hit a document excessive of $69bn (£52.5bn) within the first half of 2024, boosted by a beneficial pricing setting 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 improve throughout secondary markets, pushed by the necessity for liquidity from each LPs and GPs.
The provision was met with robust demand from consumers, who have been eager to deploy document ranges of recent capital.
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Buyout funds made up 65 per cent of secondary deal volumes within the first half of the yr, adopted by enterprise/development funds (15 per cent).
Infrastructure/actual belongings 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 stated reveals that consumers continued to favour US belongings over European ones because of the extra optimistic macroeconomic outlook within the former.
Wanting forward, Greenhill expects secondary volumes to achieve $130bn over the entire of 2024, with US rate of interest cuts and enhancing M&A exercise set to help pricing.
“We’re excited concerning the outlook for the rest of 2024 as a stabilized macroeconomic setting (together with an extra 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 anticipate full-year transaction quantity nearer to the document of $134bn reached in 2021,” the report stated.
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“Essentially the most seen clouds on the horizon are the continued geopolitical rigidity and rotation from the Magnificent Seven to small- and mid-cap shares, which can negatively affect pricing for large-cap funds with important tech publicity.
“Within the close to time period, development will proceed to be pushed by robust momentum in LP portfolio gross sales and sustained ranges of GP-led exercise as a substitute exit path to conventional M&A and IPOs. Purchaser urge for food is prone to stay robust on the again of a major quantity of dry powder, which we estimate at $269bn.”
