In a keynote interview conducted by Buyouts, Tristram Perkins, Ben Perl, and Victor Ko discuss how liquidity challenges seem to be fueling secondaries dealflow, presenting compelling opportunities for buyers.
Q What is driving secondaries volumes, particularly LP portfolio sales?
Tristram Perkins: The first thing to mention is that we have seen a complete reversal of the liquidity dynamics in private equity. Most of the last decade was characterized by record liquidity in private markets, but that started to tighten in 2021. Through 2022 and 2023 we saw fairly consistent net out flows on the part of private equity.
In our view, this reversal of cash flows is also being exacerbated by the fact that allocations to private equity have increased substantially over time. PE allocations on average now account for up to 15 percent of public institutional portfolios versus 2-3 percent a decade ago, and it is hard for distributions from prior vintages, that are now slowing, to offset larger contributions related to more recent vintages.
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