Total sales of limited partnership interests on the private equity secondary markets are expected to grow 34% to $32.8 billion this year, while secondary direct investments — investments in companies — are expected to grow 54% to $19.2 billion, said preliminary estimates by NYPPEX, a global securities firm specializing in the private equity secondary market.
Volume of private equity limited partnership interests on the secondary market is expected to grow to $40.6 billion and secondary direct investments to $24.3 billion in 2015.
Sales of funds that are 9 years old or older with less than 30% remaining value, called “tail-end funds,” are expected to account for 35% of total secondary sales volume this year, up from 26% of total volume in 2013.
Public pension funds, fund of funds and financial institutions are expected to be the most active sellers on the private equity secondary market with each segment representing 18% of the sales in 2014. Some 43% of the sales were buyout funds, followed by private equity real estate with 17%; venture capital with 12%; and funds of funds with 11%.
NYPPEX executives say that limited partnership interests in funds of funds are increasingly being sold due to historically high prices on the secondary markets.
