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Dry Powder: The Private Equity Podcast
The Rise of the Secondaries Market: From Backwater to Boomtown
Jan 16, 2024
Nigel Dawn, senior managing director at Evercore, discusses the growth and development of the secondaries market over a 20-year period, exploring tools and strategies such as securitizing LP interests, selling notes in the bond market, and utilizing NAV loans. They also highlight the benefits of GPs retaining their investments, the use of continuation vehicles, and the potential growth and constraints of the secondary market in private equity.
25:03
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Quick takeaways
- The secondaries market has evolved from a backwater industry to a thriving market with various tools available for GPs and LPs to manage portfolios and generate liquidity.
- Continuation funds in the secondaries market offer GPs and investors options for liquidity, allowing them to retain control over portfolio companies and participate in the investment's upside potential.
Deep dives
Evolution and Growth of the Secondaries Market
The secondaries market has experienced significant growth and maturity over the past 20 years. Initially viewed as an industry backwater, it has now become a thriving market with numerous tools available for GPs and LPs. The stigma attached to transferring LP interests has disappeared, with secondary transactions seen as a smart way to manage portfolios. The market size has increased from $6 billion to approximately $120 billion, with a wide range of options for liquidity generation, including continuation funds, NAV loans, and private IPOs.
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