The private equity secondaries market has evolved over the past two decades from a niche solution into a bona fide asset class. What was once largely reserved for distressed sellers is now a sophisticated, and in our view, essential component of portfolio management for investors and private equity (PE) sponsors alike. So, what is behind the current explosion of secondaries activity? In this paper, Nick Lawler examines secondaries’ performance over multiple market cycles, their persistent structural advantages, three common misconceptions, and why current market conditions present a particularly compelling entry point.
TIME-TESTED BENEFITS
The secondaries asset class has demonstrated remarkably consistent performance across multiple economic cycles. Since the early 2000s, secondaries funds have delivered median returns in line with those of PE, growth equity and venture capital. They have done so while exhibiting significantly lower volatility – secondaries is the only asset class with bottom 5th percentile funds generating positive median IRR (internal rate of return) performance over the past 25 years (see Figure 1) – while preserving the potential to generate meaningful upside.
You can now read the full whitepaper at the link below
