PitchBook November 04, 2014
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As PitchBook’s 2H 2014 U.S. PE & VC Fundraising & Capital Overhang Report details, secondaries funds have become increasingly popular in 2014. Possible key factors in the rise of secondaries include, on the sell side, regulatory pressure on financial LPs to divest private equity holdings, as well as short-term liquidity needs from public pensions. From a buyer’s perspective, secondary fund sales offer diversification at a discount as well as an accelerated distribution timeline. The video above recaps recent activity in the secondaries market, while key points are also visually summarized below.
One LP that has been particularly active in this space is the Florida State Board of Administration. In October alone, this public pension has sold stakes in three European funds: Carlyle Europe Partners III, PAI Europe V and Charterhouse Capital Partners IX.
On the fundraising side, Deutsche Bank Asset Management’s private equity unit held a close on its most recent secondaries fund, DB Secondary Opportunities Fund III at $1.665 billion on October 21, 2014.
Furthermore, the fundraising market looks to remain active through the end of the year and into 2015 with several mega-secondaries funds still in the market, including Lexington Capital Partners VIII, which has already raised $5.5 billion and is targeting $8 billion in commitments with a hard cap of $10 billion.