Updated with correction
Worldwide private equity secondary market transaction volume hit an estimated $55.4 billion in the first six months of 2019, up 32% from the same period in 2018, according to an analysis by NYPPEX.
The secondary market broker projects private equity secondary market volume for the year could rise to about $116 billion, the first time it has projected an annual volume of more than $100 billion. NYPPEX's analysis forecasts private equity transaction volume to be about $61 billion, which would be a 10.9% increase from the six months ended Dec. 31, 2018.
By December 2023, said Laurence G. Allen, managing member of NYPPEX, "we project $215 billion annual secondary private equity transaction volume. The projection includes both secondary limited-partner interests in funds and shares in private companies.
NYPPEX expects that the turnover rate — the percentage of existing private equity fund interests and portfolio companies selling on the secondary market — to grow to 5% in coming years. NYPPEX estimates the 2019 annualized turnover rate for the private equity asset class worldwide would be 2.5%, up from 1.6% in 2018.
General partner-led transactions also grew in the first half of 2019 with an estimated 34% increase to $18.7 billion, compared to a 28% increase to $10.1 billion in the first half of 2018.
Separately, online marketplace Palico reported that the average price of LP interests in the 36 alternative investment funds covered in its secondary market pricing survey was 100% of net asset value in the first half of 2019.
Waterland Private Equity Fund VI, a 2015 vintage fund, with 121% of net asset value, had the highest price in the period. Advent Global Private Equity VII, a 2012 vintage fund, had highest price at 105%, followed by Baring Asia Private Equity Fund VI, a 2015 vintage fund, at 113% of NAV and Cinven V, a 2013 fund, with 111% of NAV.
The average discount for funds selling below 100% of NAV was 92%. The lowest price during the first half of 2019 was for limited partnership interests in BC European Capital VIII, a 2005 vintage fund, which sold at 77% of NAV, followed by EnCap Energy Capital VIII at 82% and Oaktree European Principal Fund III, a 2011 vintage fund, at 85%.