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Value of private equity LP interests sold on secondary market up 7%

The transaction value of private equity limited partnership interests sold on the secondary market is estimated to have increased 7% to $22.1 billion for the six months ended June 30, from the same period in 2017, according to soon-to-be released data from secondary market broker NYPPEX, provided exclusively to Pensions & Investments.

NYPPEX attributed the increase to a combination of several large portfolio transactions and a highly active second quarter after a quiet first quarter.

NYPPEX executives anticipate that secondary volume of private equity limited partnerships will increase 12% in the second half of 2018, compared to the second half of 2017. They expect the growth will be from investor rebalancing of their private equity portfolios due to uncertainty around future market conditions.

Separately, NYPPEX estimates that the value of the sale of private company securities on the secondary market increased 16% to $13.8 billion in the first half of 2018, from the first half of 2017. NYPPEX reported that the increase was caused by a decline in initial public offerings, and mergers and acquisitions of private equity-backed companies causing general partners and shareholders to create exits in the secondary markets. The growth was also attributed to higher confidence in venture fund valuations, enabling more buyers and sellers to agree on price, NYPPEX said.

Executives at NYPPEX estimate that the volume of the sale of private company securities on the secondary market in the second half of 2018 will increase 18% from the second half of last year to be driven by higher demand and higher bids as secondary buyers seek higher returns from direct investments.