New York (HedgeCo.Net) – Making 2014 the busiest year in the secondary market thus far, H1 volume hit $22 billion (a 47% increase year over year), according to the newly released Setter Capital Volume Report – H1 2014, which covers the secondary market for private equity, real estate, infrastructure and hedge funds for the first half of the year.
Total volume for H1 2014 was $22 billion
Respondents alone did $14.3 billion
Volume broken down:
Private Equity: $16 billion : 11.3 billion for funds, and $4.6 billion for directs
Real Estate Funds: $3.0 Billion
Hedge Funds: $2.2 Billion (~13% of total fund sales) Side Pockets made up 96.3% of sales, with Main funds making up only 3.7%.
Infrastructure Funds: $0.5 Billion
Over 50% of total volume was of North American focused funds, and Western European funds accounted for 31% of total volume.
Profile of Buyers:
Secondary funds ($15.4 billion), funds of funds ($3.8 billion) and funds of hedge funds/hedge fund secondary funds ($1.6 billion) were the most active buyers in H1 2014
North American buyers transacted the most (~57%), followed by European buyers (~40%).
37% of buyers broadened their secondary focus in H1 2014, and 36% of buyers plan to broaden their focus in H2 2014.
Profile of Sellers:
Pensions and banks were the most active sellers in H1 2014, accounted for 48% of total volume together. They are expected to be the most active sellers for full year 2014.
Interestingly, managers (GPs, FoFs, Hedge funds) were very active sellers, utilized the secondary market as a liquidity tool and accounted for ~ 28% of total volume.
North American (46%) and Western European (43%) based sellers accounted for the vast majority of volume in H1 2014.
~40% of volume was from European buyers
~43% of volume was from European sellers
~31% of volume was of Western European Assets
~57% of volume was from North American buyers
~46% of volume was from North American sellers
~53% of volume was of North American Assets
Projected Volume for full year 2014
Using survey recipients’ projected H2 volume we are able to predict full year 2014 volume of $45 billion, up 25% year over year
The data within the report was extrapolated from a 14 question survey in which 81 of the top 126 secondary buyers (87 secondary funds, 33 funds of funds, 12 hedge funds of funds/secondary funds, 12 investment consultants, two pensions and one insurance company) participated. These 81 buyers alone transacted on $14.3 billion of secondaries across the spectrum of alternatives in the first half of 2014.
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