London city skyline

23 Jun 2022

Investec’s Annual Secondaries Report 2022: Key findings

How has activity around secondaries changed in the last 12 months? What key trends do secondary fund managers expect to see in the near future? Investec’s Secondaries Report, which canvasses views from 30 secondary fund managers, answers both these questions and more in this year’s report.

Download the Investec’s Annual Secondaries Report 2022

Complete the form to download our 2022 Secondaries Research report

For further details as to how Investec uses personal data, please refer to our Data Protection Notice

Sending...

Please complete all required fields before sending.

Please click on the link below to download the report.

Thank you for completing the form. If you’d like to discuss any of the findings in more detail, please contact [email protected]

Secondaries Research report 2021

Sorry there seems to be a technical issue

For the fifth consecutive year, Investec reveals the key trends driving the secondaries market, with a focus on the use of financing. Findings show a mature and robust market where financing plays a key role, on track to break more records.

The Covid-19 catalyst

Only a year after the onset of the Covid-19 pandemic, the global secondaries market shot up to record volumes in 2021, surpassing $130bn.

The majority of survey respondents believe the main driver behind these corporate acquisitions has been to increase assets under management in a growing market, closely followed by a desire to forge strategic alliances and benefit from institutionalised platforms. To a lessor extent, they attributed recent activity to partners of secondary GPs wanting to crystalise value and to succession planning efforts.

Balance is better

However, market participants are now looking to rebalance their portfolios by prioritising traditional LP trades – how long this will take remains to be seen given the Ukrainian uncertainty.

Although there may be delays due to the macroeconomic uncertainty, the LP market looks set to take back centre stage, with 70% of participants indicating they expect to be more active in this area over the next 12 months.

Priced for perfection?

As the backlog of LP sales that were put on hold unwinds, heated competition for high-quality assets is having a direct impact on pricing.

According to 48% of respondents, this competitiveness is pushing valuations ever higher, while another 21% attribute higher prices to the considerable amount of dry powder still to be deployed.

Which is currently having the biggest impact on secondaries pricing?
bar charts showing which is currently having the biggest impact on secondaries pricing


 

Financing at the forefront

73%
of respondents said the primary use of financing is to enhance returns

In order to counteract extremely high valuations, financing has become increasingly essential to transacting in private equity.

The primary use of financing is to enhance returns (73%), with more than half (55%) of respondents targeting unlevered returns of between 15-25% – and nearly half of these aiming for above 18%.

Breaking it down

As subscription lines become more sophisticated, this remains the most popular type of financing, recording 97% use. This is has come a long way from the 25-30% of funds that used these facilities five years ago.

GPs that use subscription lines to fund LP portfolio sales
charts showing GPs that use subscription lines to fund LP portfolio sales


 

Looking forward

While recent geopolitical events may dampen the mood slightly, 80% of participants we surveyed believe 2022 deal flow will exceed that of 2021.

If Covid-19 has taught us anything it is that the secondaries market is stronger than ever and should have no problem withstanding further shocks. Overflowing with liquidity and equipped with more advanced means of financing than ever, this bodes well for the uncertain environment that lies ahead.

Download the Investec’s Annual Secondaries Report 2022

Complete the form to download our 2022 Secondaries Research report

For further details as to how Investec uses personal data, please refer to our Data Protection Notice

Sending...

Please complete all required fields before sending.

Please click on the link below to download the report.

Thank you for completing the form. If you’d like to discuss any of the findings in more detail, please contact [email protected]

Secondaries Research report 2021

Sorry there seems to be a technical issue

Contact us

  • Ian Wiese

    Ian Wiese

    Fund Solutions

    As an origination director for Fund Solutions, I provide a range of flexible leverage solutions to funds and fund managers across private equity, infrastructure and other fund strategies. My main focus is in the UK primary and the European secondary markets.

    I work with clients to help them improve returns, optimise their balance sheets, create liquidity and facilitate opportunities. This can be achieved through various solutions such as GP facilities, structured fund bridging, concentrated NAV-based funding and secondary leverage.

  • Stuart Ingledew

    Stuart Ingledew

    Fund Solutions

    Working in the UK Fund Solutions team, I provide a range of flexible financing solutions to private equity funds and fund management teams. I work with a range of primary, secondary and fund of funds based throughout the UK and Europe to provide GP facilities, capital call facilities, concentrated NAV facilities and secondary leverage. My aim is to help clients improve returns, optimise balance sheets, create liquidity and facilitate opportunistic transactions.

    Additionally, I am working on the concentrated NAV financing strategy, which will enable third party investors the opportunity to gain exposure to the concentrated NAV financing product.

Contact us

Ian Wiese

Fund Solutions

As an origination director for Fund Solutions, I provide a range of flexible leverage solutions to funds and fund managers across private equity, infrastructure and other fund strategies. My main focus is in the UK primary and the European secondary markets.

I work with clients to help them improve returns, optimise their balance sheets, create liquidity and facilitate opportunities. This can be achieved through various solutions such as GP facilities, structured fund bridging, concentrated NAV-based funding and secondary leverage.

Stuart Ingledew

Fund Solutions

Working in the UK Fund Solutions team, I provide a range of flexible financing solutions to private equity funds and fund management teams. I work with a range of primary, secondary and fund of funds based throughout the UK and Europe to provide GP facilities, capital call facilities, concentrated NAV facilities and secondary leverage. My aim is to help clients improve returns, optimise balance sheets, create liquidity and facilitate opportunistic transactions.

Additionally, I am working on the concentrated NAV financing strategy, which will enable third party investors the opportunity to gain exposure to the concentrated NAV financing product.