Secondary Market Participants
As of 2009, it was estimated that there are dozens of dedicated firms and institutional investors that engage in the purchase of private equity interests in the secondary market with upwards of $30 billion of capital available for such transactions. The market for secondary interests is still highly fragmented. Leading secondary investment firms with current dedicated secondary capital in excess of circa $3 billion include: AlpInvest Partners, AXA Private Equity, Coller Capital, HarbourVest Partners, Lexington Partners, Pantheon Ventures, Partners Group, Neuberger Berman, and Paul Capital.
Other major independent secondary firms with circa $1–3 billion of current dedicated capital to secondaries include Adams Street Partners, Greenpark Capital, Hamilton Lane, Industry Ventures, Landmark Partners, LGT Capital Partners, Newbury Partners, Pomona Capital, Saints Capital, and W Capital Partners.
Additionally, major investment banking firms including Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley have active secondary investment programs. Other institutional investors typically have appetite for secondary interests. More and more primary investors, whether private equity funds-of-funds or other institutional investors, also allocate some of their primary program to secondaries.
Within the secondary arena, certain smaller specialized firms, including Industry Ventures, Lake Street Capital, Nova Capital Management, Saints Capital, Sobera Capital, Verdane Capital, Vision Capital, W Capital and Azini Capital, focus on purchasing portfolios of direct investments in operating companies, referred to as secondary directs. Other niches within the secondary market include purchases of interests in fund-of-funds and secondary funds (Montauk Triguard) and purchases of interests in real estate funds (Liquid Realty and Madison Harbor Capital).
While intermediation in the secondary market is still not as pervasive as in corporate mergers and acquisitions, leading advisors to secondary market sellers include investments banks (e.g., Credit Suisse, Houlihan Lokey, Lazard, UBS), dedicated boutique firms (e.g., Cogent Partners), electronic exchanges (e.g., NYPPEX, SecondMarket), as well as established fund placement agents (e.g., Campbell Lutyens, Cebile Capital, Park Hill Group, Probitas Partners, Triago). Since 2008, there have been a growing number of new entrants into the secondary transaction space, hoping to capitalize on what is perceived to be a growing market opportunity.
Independent advisory firms like LP Analyst have also sprung up to provide private equity investors with independent third-party analysis supporting secondary buy-side and sell-side transactions, internal and tax transfers, appraisals, audit opinions and other value assessments.
Read more about this topic: Private Equity Secondary Market
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