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Jefferies dealmaker expects secondary market volume to hit record

Managing Director at Jefferies expects 2024’s secondary market volume to hit record level.

Jefferies’ Todd Miller expects the secondaries market to have an even stronger year in 2024 with volume at a record level after ending last year on a solid note.

Miller, a managing director and co-head of the investment bank’s private capital advisory group, has high expectations due to the huge pile of dry powder held by secondary investors, an expanding buyer universe, the growing liquidity needs from LPs and improvements in pricing levels.

Headshot of Todd Miller, Jefferies Financial Group


Worldwide secondary transaction value hit $112 billion in 2023, a 4% year-over-year increase according to Jefferies’ latest Global Secondary Market Review. It marks the second highest figure only behind 2021’s peak of $132 billion.

PitchBook asked Miller to share his insights on how the asset class may develop this year. This interview was edited for length and clarity.

PitchBook: What will secondary market deal volume look like this year?

Miller: We are projecting 2024 to be a record year and expect volume to be north of $130 billion—even as much as $150 billion. That’s primarily based on two factors, one being a major pent-up demand for liquidity by investors. You combine that with all those large secondary buyers—such as Lexington Partners, Ardian and Strategic Partners of Blackstone—that have recently raised record-sized funds. There is a peak amount of buy-side capital for secondaries coupled with the need for liquidity.

We think these are the perfect ingredients for a record year. You could even say a third factor is you’ve got a public market that so far is cooperating after the rally at the end of 2023.

Do you think the traditional exit paths will be available for GPs this year?

It’s starting to open, but it has yet to fully return to 2021 levels. We’ve seen some pockets where M&A activity is starting to ramp up, but I would not say that the public markets are fully open. We’re hopeful, but that doesn’t mean that everyone’s going to run and get liquidity or try to sell a bunch of assets. We’re cautiously optimistic.

People have recalibrated to a higher interest rate environment for the last year and a half. In a higher interest rate environment, you cannot typically sell assets for the same multiple or price that you could have sold them for in a zero-interest rate environment. The multiples have contracted because you’ve got a higher cost of capital. A lot of GPs don’t want to go to the markets and sell a bunch of assets.

But again, coupled with LPs’ desire for liquidity, the secondary market is a great place for a GP to get some liquidity because they’re not selling their best assets to another financial sponsor or to a strategic [buyer]. They’re providing a liquidity option for their LPs and retain control [over their investments].

Jefferies’ latest Global Secondary Market Review shows pricing for VC secondaries was at distressed levels, trailing other strategies such as buyout and credit. In 2023, VC portfolios were sold at 68% of net asset value. Why is that?

Most venture funds have not taken write-downs. They were funded during 2021, and maybe early 2022, some in 2020, with big valuations. As a result, they’ve been living on their current cash. Most venture managers don’t have public comps to mark all of their assets to, so they use their last rounds as a proxy for the valuation.

Generally speaking, for most venture funds, buyer perception is that they’re overvalued. Besides that, some of the venture funds may have insufficient reserves for some of the portfolio companies given a potentially longer hold period. All of that has spelled a tough venture pricing environment.

The Nasdaq was up 40% last year. But why is venture pricing not up? If you take out the “magnificent seven” from the Nasdaq, the index is not up as much as you think.

There’s a skeptical view of valuation. You’ve got a lot of buyers who said, “I can be patient and wait for GPs to come back to market with new rounds—or maybe for GPs to start taking some write-downs and figure out the winners and possible losers—before I step in and start paying at the 88% of NAV for venture funds,” which was the average price of VC secondary deals in 2021.

As GPs write assets down and the M&A markets and public markets are truly reopened, you’ll see pricing get better quickly. But we’re not there yet.

How might pricing for PE secondary deals look in 2024?

We can see pricing tick up a little bit further from last year. PE secondary pricing was 97% of NAV in 2021. I don’t think we’ll get back there this year, but we could see it getting to 94% or 95% of the NAV. The ingredients are there for a good year. Interest rates are coming down, and it feels like this soft landing. “No recession” is starting to be the current sentiment.

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