Secondary Sales in PE to Boom in 2009, LP's See Huge Discounts to NAVs
Shrija Agrawal
VCCircle.com
May 2009
When the economic downturn is telling on one's existing portfolio, what are the options left with the private equity investors? Either stay with the company and ride the downturn, or sell them to any other buyer and cut your profits (or losses). And this is likely to generate a lot of interest in the private equity secondary market too.
A preqin survey showed that about 43% of private equity investors consider buying funds on secondary market and 10% consider selling. There has been a significant increase in the level of interest and activity in the secondary private equity market of late, says a report compiled by Preqin, a London-based research firm that tracks private equity fund raising globally.
“Over the course of 2009 we predict that the number of secondary sales will increase, with both buyer and seller confidence being buoyed by new fund valuations coming into play which should also help to reduce the gap between NAVs and asking prices,” said Tim Friedman, the company spokesperson. About 220 institutional investors were surveyed for the survey.
