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Secondaries market at inflection point as PE funds’ GPs initiate liquidity events

Wed, 13/08/2014 - 06:32

The global private equity secondaries market is now at an inflection point, demonstrating its capacity to support liquidity events and fund restructurings for multiple limited partners seeking early exits from their holdings, says Neil Campbell, global head of Tullett Prebon Alternative Investments (TPAI).

Campbell says such efforts work best when general partners are the initiators.
Campbell’s comments coincide with PE manager Venator Real Estate Capital Partners’ recent announcement that it had successfully facilitated a secondary auction in its Chinese real estate development fund, called Trophy Property GP Limited, giving over 30 limited partners an early liquidity window, and Partners Group the opportunity to enter the fund as a cornerstone co-investor. Tullett Prebon acted as the exclusive auction agent.
Rather than being led by limited partners (LPs) as is often the norm in private equity secondaries, the Venator deal was initiated by the fund’s general partner (GP), which selected Tullett Prebon to run a competitive auction via its electronic secondary market platform.
Tullett Prebon managed the due diligence process on behalf of prospective bidders with Venator.
“Using our competitive auction model enabled the GP to access Tullett Prebon Alternative Investments’ global investor network and simultaneously achieve a truly competitive and independent price setting mechanism for all of its LPs,” says Campbell. “All markets need to be accessible, liquid and transparent in order to be efficient and with an increasing number of GPs now recognising real advantages to being proactive on behalf of their LPs, the PE secondaries market is slowly beginning to mature. This will have far-reaching implications as we estimate there are a large number of late vintage PE funds present in the market that could benefit from both ad-hoc and ongoing liquidity events sponsored by GPs.”

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