Buyers of private equity limited partnership interests on secondary markets are lowering their bids because of China’s stock market volatility in August, NYPPEX’s revised midyear private equity secondary market outlook showed.
Private equity secondary market buyers are reducing bid prices in part because they expect fewer exits and lower distributions from private equity funds, stated the report from the secondary private equity market broker.
NYPPEX executives think worldwide stock market volatility will continue in the second half of 2015, because of an expected reduction in annual growth in China to 2% to 3% from 7% to 8%.
Therefore, NYPPEX is recommending “a significant reduction” in private equity portfolio allocations to Russia, Brazil, Argentina and Mexico. NYPPEX executives do not believe China will restart its commodity purchasing programs for years.