Why secondaries are in the spotlight
Up until now a nascent part of the investment universe, the tide appears to be turning for the private credit secondaries market.
Expert analysis by? Andy Thomson
At a time when market dislocation is dampening demand and stunting growth in some private markets strategies, credit secondaries are enjoying a boost to an already bullish upward trajectory. Buoyed by liquidity demands driving activity from both limited partners and general partners, along with broad shifts in investor appetite from equity to debt and from primaries to secondaries, new entrants are lining up to get a piece of the credit secondaries pie.
The market size for closed-end private credit funds has grown to around $1.5 trillion and keeps on expanding, meaning a wider mix of debt funds in which investors are locked up for anywhere between seven to 10 years. Credit secondaries players argue that a rough rule of thumb is that 1-3 percent of private markets stock turns over each year, as investors seek to rebalance, look for liquidity and more actively manage their portfolios, suggesting sizeable room for growth...