The secondary market for private equity has seen an increase of 10.8% year on year, to a total of $77.82bn (€70.3bn), according to independent advisory firm Setter Capital, a secondary market specialist for alternative investments.

In contrast, real estate secondaries (funds and directs) were down 36.9% to $3.69bn, as were hedge fund secondaries (37.1% to $290m).

In its latest report, the firm shows that after a record $79.67bn in 2018, secondary market volume hit $85.4bn in 2019 of completed transactions, representing a 7.2% increase from the volume recorded in the Setter Capital Volume Report FY 2018.

The firm noted that, while the breadth and number of buyers continued to increase, the most significant activity was driven by the largest buyers in the market.

Setter’s 28 question survey was completed by 100 of the 118 largest and most active buyers in the market.

The 17 largest buyers – those that deployed more than $1bn in FY 2019 – accounted for 72% of the market’s total volume (vs. 73.7% in FY 2018), driven mainly by the number of larger portfolios for sale and the record amounts of capital raised by the big players.

The survey found that buyers continued to diversify their secondaries focus with about 16.7% of participants buying other alternative investment assets for the first time, such as infrastructure and real estate.

Additionally, it showed that private debt secondaries were up a notable 104.8% ($3.14bn in FY 2019 from $1.5bn in FY 2018), and energy fund secondaries were up 4.2% ($1.77bn in FY 2019 from $1.70bn in FY 2018).

Setter said there were a total of 1,597 transactions in FY 2019, with an average size of approximately $53.5m.

In contrast, there were 1,595 transactions completed in FY 2018 but the average deal size increased 7%, driven in part by the large number of $500m plus transactions that hit the market.

Managers of funds across leveraged buyout (LBO), venture capital (VC), hedge funds, fund of funds and secondary funds accounted for 37.5% of all sellers, as they continued to use the market to drive liquidity in their funds.

Pension funds were the next most active sellers accounting for 22.7%, while insurance companies accounted for 8.5%, endowments and charities accounted for 4.6% and sovereign funds accounted for 4.2% of the total volume.

Looking forward, Setter expects pensions and fund of funds and secondary funds to be the biggest sellers in FY 2020.

It also expects 2020’s volume of transactions to be $89.12bn, up 4.3% from the $85.41 billion transacted in FY 2019, making for another record year.