Initially a means to provide early liquidity and release limited partners from remaining commitments to private equity funds, the secondary private equity market has become an increasingly effective tool for active portfolio management. Over the past ten years, the secondary market has grown from $10 billion to nearly $60 billion in annual transaction volume.
Benefits of Secondaries
Secondary investments provide a way to invest in established private equity sponsors while mitigating certain risks associated with primary investments. The potential benefits of this strategy include the following:
- Purchasing fund interests at a discount to net asset value
- Mitigating the J-curve and shortening hold periods
- Reducing blind pool risk by investing in funded portfolios
- Creating a meaningfully diversified portfolio in a shorter timeframe
Portfolio Advisors has been an active participant in the private equity secondary market since 2002. Key characteristics of our approach include the following:
- Leveraging our Platform: We source a wide breadth of secondary opportunities across our private equity, real estate and credit platforms.
- Investing with Core Managers: We seek to invest in high-quality sponsors with whom Portfolio Advisors has had longstanding and successful relationships.
- Constructing Diversified Portfolios: We seek to acquire mature, high-quality funds diversified by vintage year, industry and sector.
- Valuable Information Advantage: Through our platform, proprietary database and longstanding GP relationships, we have a valuable information advantage, which stand-alone secondary funds may not have.
- Experienced Team: Our team has more than 80 years of aggregate private markets experience and we’ve completed more than 100 secondary transactions.