Repackaged secondaries deals, in which private equity investors sell parts of their own investment portfolios, are on the rise
According to a person familiar with the matter, the stakes are part of an old Partners secondaries fund that housed investments in other private equity funds.
Financial News reported in January that this kind of repackaged secondaries deal was on the rise. These transactions often take place when secondaries firms want to close funds that only have a few fund stakes left in them.
Repackaged secondaries deals accounted for 30% of the value ($ 12 billion) of all secondaries deals in the first half of 2016, according to Greenhill Cogent’s Secondary Market Trends & Outlook, published in July. A year ago, that figure was 20%.
Some investors believe repackaged secondaries deals to be an efficient way of winding up old funds as so-called ‘tail end’ assets are often unlikely to influence the overall performance of a fund. However, others have expressed concerns that these older fund stakes are merely being recycled in the market, often with additional levels of debt.
A separate study by advisory firm Campbell Lutyens found in January that more than half of the 30 largest investors in second-hand fund stakes have offloaded part of their own funds on the secondaries market.