What do LPs get out of selling on the secondaries market?
Despite a couple of pulled-transaction anomalies, secondaries sales are still seen as a powerful tool for rebalancing portfolios.
The LP-led market is bustling with sellers looking to rebalance and de-risk their private market portfolios – a trend that is likely to continue, despite occasional examples of LP sales falling through.?
LP-led volume accounted for $40 billion of the $68 billion of global secondaries volume seen in the first half of 2024, according to Jefferies ' Global Secondary Market Review. The report points out that as some of the largest LPs continue to grapple with overallocation to private equity – in many cases, as much as a 40 percent overallocation – there’s potential for significant selling activity from these large LPs over the next 12-18 months.?
Anomalies may still arise in large portfolio sales. Take APG Asset Management : the Dutch pension giant recently pulled the plug on a large sale that could have been worth between $2 billion and $3 billion, affiliate title Secondaries Investor reported in July. APG cited unsatisfactory pricing as the reason for the deal falling through, and later confirmed this when approached for comment by Private Equity International. Sources familiar with the sale process have since told PEI that APG’s leadership team has allowed more capital to be allocated to private equity as it plans to take a more strategic approach to the asset class – something it denies.??
It’s not the only pension to shelve an LP-led due to pricing.
Read the full story here.