Sections

Real estate secondaries sole 'bright spot' in 2015 – report

The secondary market for property was the sole “bright spot” over the course of 2015, as hedge fund secondaries saw deals fall by two-thirds, according to a wide-ranging survey of the market.

Setter Capital said 2015 saw the end of two consecutive years of what it deemed breakneck growth, with secondary market transactions only increasing marginally from $49.3bn (€61.9bn) to $49.6bn.

It added that while the value of the overall market increased, the experiences of different market segments was not uniform – with private equity, infrastructure and hedge funds all down, to varying degrees.

While hedge fund secondaries suffered the steepest drop, at 66.7%, infrastructure transactions were also down by 15.6%, and private equity fell by 0.5%, to $37.7bn.

Direct secondary deals, stemming from the liquidation of secondary funds, were also slightly down last year over 2014, with private equity accounting for $9.2bn of the $10.2bn in deals.

“Although overall direct volume was down 7.3%,” Setter Capital’s volume report for 2015 said, “supply appears to have increased, as respondents felt that more managers attempted to liquidate or restructure older funds.”

Setter also suggested its figures could be misrepresenting the size of the market – while its findings were presented in US dollars, transactions occurring in euros would have been impacted by a 12% devaluation of the single currency compared with the dollar.

Large buyers, acquiring stakes worth more than $1bn, dominated the market, accounting for nearly two-thirds of all deals, up by 2.2 percentage points compared with 2014.

The report added: “Buyers continued to diversify their secondary focus, with about 17% of participants buying other alternative investment types for the first time.”

The impact of diversification saw buyers acquire stakes in real estate, infrastructure and other asset classes. 

The UK’s Universities Superannuation Scheme recently completed a sizeable secondaries market transaction, selling £640m (€868m) worth of stakes in more than a dozen private equity funds. 

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2467

    Asset class: Search for a broker (mainly ETFs).
    Asset region: Global.
    Size: 250m.
    Closing date: 2018-08-28.

  • DS-2468

    Closing date: 2018-08-24.

Begin Your Search Here